Income Gains from Budget 2022

When assessing the change in people’s incomes following any Budget, it is important that tax changes be included as well as changes to basic welfare payments. In our calculations we have not included any changes to other welfare allowances and secondary benefits as these payments do not flow to all households.

Similarly, we have not included changes to other taxes (including indirect taxes and property taxes) as these are also experienced differently by households. Chart 1 sets out the implications of the Budget announcements on various households in 2022.

Chart 1: Impact of Income Tax and Headline Welfare Payment Changes from Budget 2022

Notes: * Except in case of the unemployed where there is no earner. Unemployed aged 26 years plus. All other earners have PAYE income. Couple with 2 earners are assumed to have a 65%/35% income division.  Lower income earners may also benefit from an increase in the minimum wage.

Single people who are unemployed will benefit from the weekly increase from March and the Christmas bonus increase which equates to €5.00 a week (€260 a year). Those on €25,000 a year will see an increase of €2.21 a week (€115 a year) in their take-home pay while those on €50,000 will be €7.96 a week (€415 a year) better off in the coming year and those on €75,000 a year will be €7.96 a week (€415 a year) better-off.

Couples with one income on €25,000 a year will be €1.25 a week (€65 a year) better-off while those on €50,000 will be €8.92 a week (€465 a year) better off. Couples with two incomes on €75,000 a year will be €15.91 a week (€830 a year) better off while those on €100,000 will be €15.91 a week (€830 a year) better-off in the coming year.

Some lower income earners may also benefit from the increase in the minimum wage. This is not factored into these calculations as most lower income earners earn more than the minimum wage albeit for a limited number of hours per week and the income may not definitely benefit from the 30c per hour increase.