The Irish Budget for 2024 was announced on Tuesday, October 10, 2023. The budget will see adjustments to income tax, Universal Social Charge (USC), PRSI rates, company car benefits, and the national minimum wage.
Below, we explore the key changes announced in Budget 2024 and what they mean for the world of payroll. Understanding how these changes will influence your payroll operations is vital, to ensure your organisation is compliant and your employees are compensated accurately.
Income tax rates will stay the same (at 20% and 40%), but there will be increases to tax credits and changes to the income tax bands in 2024.
The standard rate tax band (the amount you can earn before you start to pay the higher rate of tax) will be increased by €2,000 to €42,000 for a single person, with proportionate increases for married couples and civil partners.
The following tax credits will increase by €100 to €1,875:
- Personal Tax Credit
- Employee Tax Credit
- Earned Income Tax Credit
The increases to the standard rate tax bands and tax credits will come into effect from 1st January 2024. Revenue Payroll Notifications (RPNs) for 2024 will be available from Revenue in early December 2023.
Universal Social Charge (USC)
The ceiling for the 2% Universal Social Charge (USC) band will increase by €2,840 from €22,920 to €25,760 from 1 January 2024. This ensures that employees who receive the new national minimum wage for a 39 hour week remain on the lower rate scale for USC
The 4.5% USC rate that currently applies to income between €22,900 and €70,044, will be reduced to 4% from 1 January 2024. The 4% rate will apply to income between €25,761 and €70,044.
The changes to the USC rate bands will come into effect from 1st January 2024. Revenue Payroll Notifications (RPNs) for 2024 will be available from Revenue in early December 2023.
PRSI (rise effective 1st October, 2024)
All PRSI rates will increase by 0.1% on 1 October 2024.
Advance notice of an increase in pay-related social insurance (PRSI) has been given. This will come into effect from 1st October, 2024. All PRSI rates will increase by 0.1% on 1 October 2024.
The increases to PRSI rates will come into effect from 1st October 2024.
Company car benefit-in-kind tax
The following will apply for BIK on employer-provided vehicles for 2024:
A reduction of €10,000 will apply to the original market value (OMV), to reduce the amount of BIK payable, for all cars in Category A,B,C and D (not E) and all vans.
The current reduction of €35,000 in OMV will continue to apply for all electric vehicles.
The lower mileage limit in the highest mileage band which applies to employer-provided cars will remain at 48,000.
For 2025, 2026 and 2027, the reductions in the OMV for electric vehicles will be €35,000, €20,000 and €10,000 respectively.
These changes will come into effect from 1st January 2024.
National Minimum Wage
The national minimum wage will increase by €1.40 to €12.70 per hour.
The increase in the national minimum wage will come into effect from 1st January 2024.
If you would like to talk to us in more detail about how we can support your payroll process, please feel free to get in touch.
The above is our interpretation of the upcoming changes announced on Tuesday, 10th October 2023, it is not intended to constitute tax, financial, or legal advice. Some elements of these measures may change when the legislation required to bring them into effect is enacted.