Minimum wage workers will not have to pay extra tax because of a 30 cent hike in their pay from next month.
It comes as the minimum wage is set to rise from €9.80 to €10.10 an hour from February 1.
Full time workers doing 39 hours a week will earn €394 a week or €20,483 a year when the increase takes effect.
The Government has announced that it is therefore pushing up the threshold for the USC from its current level of €19,874 to €20,484 a year.
This will prevent workers on the minimum wage being pushed over the threshold into a higher rate of USC.
It ensures the highest rate they will pay is 2pc.
USC will therefore be paid at 0.5pc on the first €12,012 of income, 2pc on the next €8,472, 4.5pc on the next €49,560 and 8pc on the rest.
Minister for Finance and Public Expenditure and Reform Paschal Donohoe said this is the fifth year in a row that the minimum wage has increased.
“The Government remains committed to ensuring that all work pays well and to reducing excessive tax rates for low and middle income earners,” he said.
In a statement, the department said the change will be legislated for later in the year as part of the usual Finance Bill process.
“In the interim, Revenue have agreed that this will be implemented on an administrative basis for the 2020 tax year,” it said.