Income tax will be cut in this year’s budget, Michael McGrath has confirmed. 

Fine Gael are pushing for €1,000 tax cut for those earning €52,000 or less in the budget - a policy that has reportedly caught their Fianna Fáil coalition partners by surprise. 

Speaking to journalists, the Minister for Finance confirmed that income tax would be cut but said he would not be drawn on the “detail” of any changes. 

“What I can signal clearly is there will be a further reduction in the burden of income tax in the budget but beyond that I’m not in a position to get into any specific detail,” he said. 

“The measure that was set out in the article, depending on how you design it, how to blend credits and bands, could cost anything up to €1.5 billion in a full year. 

“So, I have to consider all of the demands, all of the asks, along with, of course, Minister [for Public Expenditure Paschal] Donohoe.” 

The budget is due to be held in the autumn and Taoiseach Leo Varadkar has already confirmed there will be an increase in the State pension as well. 

Paschal Donohoe and Michael McGrath. Picture by: Julien Behal Photography

State Wealth Fund

The exchequer is expected to record a €10 billion surplus this year amid surging corporation tax receipts and €16 billion in 2024. 

Minister McGrath has signalled he will create a State Wealth Fund, which he described as a “once in a generation opportunity to make the nation’s finances safer”. 

“I do believe that this generation of politicians has an obligation to ensure that these windfall receipts are put to very good use,” he said. 

“Because we know we cannot make permanent expenditure commitments on the back of receipts that could prove to be temporary.”

People Before Profit said the creation of such a fund “makes no sense” amid record levels of homelessness and should instead be spent on housing.

Main image: Minister for Finance Michael McGrath.