The Government is set to raise the standard rate tax cut-off point in the Budget by €2,000, RTÉ News has learned.
It will rise from the current €42,000 to €44,000 after the change was agreed in principle following a proposal tabled by Minister for Finance Jack Chambers.
This means people will pay the lower 20% rate of income tax on earnings up to €44,000.
The change was discussed by the Minister for Finance, the Minister for Public Expenditure and the Government party leaders last night.
Further talks on the overall shape of the Budget are set to continue over the weekend.
Last night, it emerged that the Coalition could reduce the Universal Social Charge from 4% to 3% on incomes between €25,760 and €70,044 in Budget 2025.
It is believed Minister for Finance Jack Chambers tabled the proposal, following a meeting with the coalition leaders, who held discussions for more than two-and-a-half hours.
Reducing the USC was a priority for Fianna Fáil to target low and middle income earners in the budget's income tax package.
It follows on from the reduction of 0.5% which was made last year by then finance minister Michael McGrath.
A one percentage point reduction would be the largest taken by this Government, and form part of a tax package which also involves changes to credits and bands.
Additional reporting: Paul Cunningham
