Tax rate
The higher tax rate will remain at 40% for 2018.
Standard rate cut-off point
The entry point to the higher rate of tax for single earners has increased from €33,800 to €34,550.
Universal Social Charge (USC)
The USC has been cut for lower and middle income earners. The 2.5% and 5% rates have been reduced by 0.5% and 0.25% respectively.
The entry threshold for USC will remain at €13,000. However, there has been an increase in the 2% band threshold from €18,772 to €19,372 to benefit employees earning the minimum wage.
From €1 – €12,012 | 0.5% |
From €12,012 – €19,372 | 2% |
From €19,372 – €70,044 | 4.75% |
Over €70,044 | 8% |
Medical card holders and individuals aged 70 years and over whose aggregate income does not exceed €60,000 will now pay a maximum USC rate of 2%.
The 11% rate will continue to apply for self-employed income over €100,000.
Deposit Interest Retention Tax (DIRT)
The DIRT rate for 2018 will be charged at 37%.
Home carer tax credit
The home carer credit will increase from €1,100 to €1,200. The €7,200 income threshold remains.
Earned income tax credit
For self-employed individuals, the earned income tax credit will increase by €200 to €1,150.
Personal tax credits |
Single | €1,650 | €1,650 |
Married | €3,300 | €3,300 |
PAYE | €1,650 | €1,650 |
Earned income tax credit for self-employed | €1,150 | €950 |
Home carer credit | €1,200 | €1,100 |
Age exemption limits (aged 65 and over) |
Single | €18,000 | €18,000 |
Married | €36,000 | €36,000 |
20% standard rate tax bands |
Single | €34,550 | €33,800 |
Married one income | €43,550 | €42,800 |
Married two incomes | €69,100 | €67,600 |
Mortgage interest relief
Mortgage interest relief was scheduled to be abolished with effect from the end of 2017. However, it will now be gradually phased out between 2018 and 2020. The relief, which is only available on qualifying mortgages taken out between 2004 and 2012, will be reduced to 75% in 2018, 50% in 2019, 25% in 2020 and will be unavailable thereafter.
Deductibility of pre-letting expenses
Expenses incurred prior to the letting of a property are not generally deductible against taxable rental income. The Minister has announced a limited relaxation of this restriction in order to encourage the release of vacant properties into the rental market. This relaxation will only apply to residential property.
Between now and the end of 2021, pre-letting expenses of a revenue nature, up to a maximum of €5,000 per property, will be deductible if the property has been vacant for a period of 12 months or more prior to being rented. The relief will be subject to clawback if the property is subsequently withdrawn from the rental market within four years.
It should also be noted that following a change included in last year’s Finance Act, the amount of mortgage interest that can be deducted against taxable rental income from residential property will increase from 80% to 85% with effect from 1 January 2018.
Benefit-in-kind (BIK) on motor vehicles
The Minister has announced that a comprehensive review of BIK on motor vehicles (of all kinds) is to take place, which will inform decisions in this area for next year’s Budget.
In the interim, a temporary 0% rate of BIK is being introduced for electric cars and in respect of electricity used at work for charging such vehicles.
Drugs payment scheme
The monthly threshold for the drugs payment scheme is being reduced from €144 to €134 per month.
