Ireland’s income-tax bands are ‘placing an increasing and unfair squeeze on middle-income workers’, warns Sligo councillor
The Sligo Champion“Ireland’s income-tax system is placing an increasing and unfair squeeze on middle-income workers and families,” according to Cllr Seamus Kilgannon who addressed the matter at the September meeting of Sligo County Council.
Seeking to have this situation addressed, Cllr Kilgannon’s motion before the September meeting of Sligo County Council urged the Local Authority to, “Call on Ministers for Finance and Public expenditure that in framing Budget 2027 they insure it will deliver a tax package that starts to correct the demoralising top tax rate that has hit middle-income earners hardest.”
Speaking to the motion, Cllr Kilgannon said, “The issue is not simply that Ireland has a 40% higher rate of income tax. Many countries have high marginal rates. The problem is that Ireland applies its higher rate at a comparatively modest level of earnings: in 2026, a single worker enters the 40% band at €44,000, while a married one-earner couple has a standard-rate band of €53,000. As a result, workers on ordinary middle and upper-middle incomes can find a significant portion of their pay taxed at the higher rate.”
Cllr Kilgannon continued, “The median full-time income in Ireland is €48,900. This means that more than 50% of full-time workers are paying the highest rate of tax. Out of that figure, over 60% are earning less than €83,300, the amount you would need to earn in France before you reach a similar rate of tax.”
Highlighting the toll this is taking on workers, Cllr Kilgannon added, “This pressure is compounded by USC and employee PRSI. For many workers, an additional euro can earned through overtime, promotion or taking on more responsibility is not taxed at 40% alone; it can also be subject to USC and PRSI. In 2026, USC goes as high as 8% and PRSI will hit 4.3% later this year. The combined marginal deduction can therefore feel far higher than the higher income-tax rate suggests.”
Cllr Kilgannon argued the case for widening the standard-rate band saying, “The Programme for Government committed to indexing credits and bands so that workers would not face a rising real tax burden simply because of wages and price increases. The Government has also acknowledged that non-indexation increases the real burden of tax. Yet Budget 2026 left the main income-tax bands unchanged, allowing normal pay increases to push workers further into the higher-rate system without making them meaningfully better off in real terms.
“This is particularly difficult to justify while housing, childcare, energy, insurance and other essentials remain expensive. Increasing the threshold at which the 40% rate begins should not be framed as a tax break for the wealthy. It is a measure to prevent ordinary wage growth from automatically becoming a higher tax burden.”
Cllr Kilgannon concluded by highlighting the difference between Ireland and its European counterparts in terms of how quickly a middle-income earner can enter the 40% income-tax bracket.
“In France, for example, a worker can earn up to €83,800 before they hit the highest rate of tax of 41%. Roughly 30% of all Irish full-time earners fall between our €44,000 threshold and their €83,800 threshold. Germany uses a progressive formula and, for married couples, an income-splitting system that can reduce the tax burden where one spouse earns most or all of the income. In both countries, social contributions can be heavy, but the structure does not create the same cliff-edge perception that Irish workers experience when the 40% band begins at €40,000 for a single person.”
The motion was supported by Cllr Donal Gilroy who expressed his wish that the upcoming budget will address the matters raised saying, “We all hope there will be something.”
Cllr Thomas Walsh also gave the motion his backing saying, “This is a really good motion, given the last budget didn’t do enough for middle-income Ireland. It did more for those who don’t work than those who do. They feel over-burdened, over-stretched and the cost of living has got to a stage where something has to be done about it.”
Cllr Walsh concluded by remarking, “People need to feel rewarded for going to work, not the other way around.”
Cllr Edel McSharry also voiced her support for the motion saying, “These are people working in our services, in our communities. We want to encourage a work ethic. We are a prosperous country. We have to make this a country where people who are working and earning can buy a house.”
Cllr Arthur Gibbons also offered his support for the motion but added a word of caution when he said, “There are a lot of people out there who can’t work,” adding, “I don’t want it going out that those not working are all not wanting to work.”
Cllr Gino O’Boyle echoed those sentiments when he remarked, “We need to be attacking poverty, not poor people.”
Article Funded by the Local Democracy Reporting Scheme.