Over one million Irish workers could benefit from a new 30% tax rate that will be analysed by the government ahead of the budget.
No solid decision has been made on its introduction, however, it will be included in a pre-budget analysis to be released on Wednesday.
Should it be introduced, the middle-income rate would form part of the Tax Strategy Group papers and will help over one million taxpayers amid the cost of living crisis.
READ MORE: Almost half a million workers could be due refund after paying €600 too much tax
According to sources, the papers do not make a definitive recommendation to the government, but rather lay out details of the proposed changes.
There are also doubts about whether such a change in the tax structure could be organised by next month.
Speaking on RTÉ's Today with Claire Byrne last month, Tanaiste Leo Varadkar had said there were options that were under consideration for the Budget.
He acknowledged that "as people's incomes rise, more and more get hit by the higher tax rate" but said the 30% tax rate was not considered a firm commitment at the time.
He said the Minister for Finance, Paschal Donohoe, thought there were pros and cons to the idea, and added that, "it is being examined and we will make a decision at Cabinet".
He also said that even though the gap between how the cost of living crisis affects lower and higher income earners seems high, it is in fact "much narrower" than people think.
"The CSO did some really interesting research on this only last month... inflation has reduced the incomes of people in the lowest quarter by about 7.6% [and for the middle] by 6.7%." he said.
"Sometimes you'd have the impression that people on the lowest incomes are being hit twice as hard but that is not the case."
The papers are due to be released tomorrow, and further information on whether or not a new 30% tax rate band will be introduced will be confirmed ahead of the budget in September.
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