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Irish Budget 2009 – All Taxpayers Affected

#TaxTipsIreland

Irish Finance Minister Brian Lenihan yesterday presented the toughest Irish Budget in decades.

The Budget 2009 changes will impact on all taxpayers on everything from cigarettes to travel to child benefits as the Irish Government attempts to counter the effects of the global financial crisis on Ireland. The main changes include:

New Income Levy: A 1% income levy will be applied from January 1st 2009 to all incomes up to €100,100 and 2% on all incomes above that. For example if you earn €40,000 a year, you will pay a levy of €400.

Petrol, Wine and Cigarettes Duty Increases: Petrol goes up by 8 cents per litre, wine by 50 cents per bottle and the price of cigarettes rises by 50 cents per packet of 20 effective today.

€200 Levy on Second Properties: This €200 levy will be charged on all non-principal private residences.

Departure Tax on Foreign Holidays: Air passengers travelling more than 300km from any Irish airport will be charged €10 exit tax from March 30th 2009. For those on journeys shorter than 300km it will be €2.

Increased Standard VAT Rate: The standard rate of VAT will increase to 21.5% from December 1st 2008. This will apply to all goods and services currently subject to VAT at 21%. There will be no change in the zero rate, which applies to food, children`s clothes and footwear, oral medicines and several other products.

Increased Standard Income Tax Band: The 20% standard income tax band will be widened by €1000 to €36,400 for single people and €45,400 for married couples with one income. For married couples with two incomes the band increases to €42,800. This means, for example, that single workers will pay 20% tax on earnings up to €36,400 and 41% after that.

No Change to Personal Tax Credits: Personal tax credits remain at €1830 for single persons and €3660 for married couples for 2009.

Changes to Child Benefit: From January 2009 child benefit for 18-year-olds will be halved and then will cease entirely from 2010. In addition, children older than 5 will no longer be eligible for the €1100 a year childcare supplement.

Examples: If you are a single person earning €26,000

20082009
Gross pay €26,000 €26,000
Tax you’ll pay €3,370 €3,370
PRSI and health levy €776 €776
Income Levy* €0 €260
Net income €21,854 €21,594
Loss -€260



If you are single person earning €45,000

20082009
Gross pay €45,000 €45,000
Tax you’ll pay €9,186 €8,976
PRSI and health levy €2,436 €2,436
Income Levy* €0 €450
Net income €33,378 €33,138
Loss -€240



If you`re a married couple with no children and one income of €35,000

20082009
Gross pay €35,000 €35,000
Tax you’ll pay €3,340 €3,340
PRSI and health levy €1,750 €1,750
Income Levy* €0 €350
Net income €29,910 €29,560
Loss -€350



If you are a married couple with two children (one aged under 5) and two incomes totalling €65,000

20082009
Gross pay €65,000 €65,000
Tax you’ll pay €5,680 €5,680
PRSI and health levy €3,372 €3,372
Income Levy* €0 €650
Child Benefit €3,840 €3,984
ECS €1,100 €1,100
Net income €60,888 €60,382
Loss -€506

 

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