Changes in the Budget mean 668,000 workers, or 38 per cent of the workforce, will be exempt from paying income tax.
Taxpayers aged over 65 and those under that age will be affected by the changes in different ways. Single or widowed people over 65 can earn an additional £1,000 before paying tax. Their threshold increased to £8,500 from £7,500.
Married couples over 65 can earn £2,000 more before paying tax on their income. That tax threshold rose to £17,000 from £15,000.
In the nine-month tax year beginning next April, single people aged over 65 can earn £6,290 before paying tax and married people above that age can earn £12,580.
Mr McCreevy said the Government was committed to reducing the tax burden on the elderly. "Since I took office, the exemption limits for the aged have been increased by up to 85 per cent."
For those under 65, the changes are slightly more complex.
Single people can earn an additional £800 before paying income tax. Their threshold rose to £5,500 from £4,700.
These figures also apply to one-parent families and widowed people.
For married couples the threshold rose by £1,600 to £11,000 from £9,400.
When these changes are introduced in April, taxpayers under 65 will also be entitled to a £2,000 PAYE allowance. This is twice the rate which applied after last year's Budget.
Mr McCreevy also widened the standard income tax band to £20,000 from £17,000, stating that many workers on the higher band had incomes "just above" the average industrial wage.
"The proportion of income earners on the higher rate will fall to 23 per cent," said Mr McCreevy.
The standard tax band for married couples with one earner will rise by £1,000 to £29,000 from £28,000.
The band will rise to £40,000 from £34,000 for married couples with two incomes.
For one-parent families the band will rise to £23,150 from £20,150.
Mr McCreevy cut the standard income tax rate to 20 per cent from 22 per cent.
He cut the higher rate to 42 per cent from 44 per cent.
