The Dáil has adjourned after passing the immediate financial measures announced in the Budget, including the 50 cent increase in the price of 20 cigarettes.
The increase was passed unanimously by TDs.
The Minister for Finance, Brian Cowen has said the reduction in income tax will 'benefit everybody'.
Speaking on RTÉ’s Six One, the Minister also said that the doubling in mortgage interest relief for first time buyers will not be wiped out by interest rate increases in the coming years.
He said it was an important initiative that would benefit 125,000 people in a way that would not inflate house prices.
Today, the Minister announced that he is reducing the top rate of tax from 42% to 41%.
Delivering his third budget in the Dáil, Mr Cowen also announced that the non-contributory old age pension will increase by €18 to €200, and the contributory pension will go up by €16 to €209.30 per week.
The Minister's changes to the tax regime amounted to a give away of €1.25bn a year.
He did not increase duties on alcohol.
Mr Cowen is increasing the threshold for payment of the health levy from €440 per week to €480 or just under €25,000 per year.
The income tax exemption limits for senior citizens aged 65 and over are being raised from €17,000 and €34,000 to €19,000 and €38,000 per year respectively for single and married persons, removing a further 9,000 from the tax net.
Widowed persons additional tax credit is to increase by 10% to €550 per year.
Around 88,000 people will be removed from the tax net as a result of changes to income tax in the Budget.
The point at which people will start paying income tax is being increased to €7,600 per year, that is €8.65 per hour.
The personal tax credit has been increased by €30 to €760 each year for single people and increased by €60 to €520 for married couples.
The Employee tax credit has also been increased by €70 to €760 per year.
These changes mean that two out of every five earners (846,000 people) will be outside the tax net in 2007 compared to one third of earners in 2004 and one quarter of earners in 1997.
The 20% standard income tax band will be widened by €2,000 per year, that is to €34,000 for single people and €43,000 for married one-earner couples.
The Minister announced an extension of VAT and other measures affecting farmers, as well as small cuts in the range of Stamp duties.
