The Irish Government has unveiled Budget 2025, delivering a financial package aimed at addressing the cost-of-living crisis, supporting economic growth, and preparing for future challenges. With a total budget of €8.3 billion, the government has introduced a series of tax reforms, social welfare increases, and measures to aid families, workers, and businesses. Below is a detailed breakdown of the major changes from Budget 2025.
1. Income Tax Measures
In Budget 2025, the government has introduced a series of adjustments to income tax to ease the financial pressure on low and middle-income earners.
Standard rate band
Increase of €2,000 to the income tax standard rate band cut-off point for all earners. This will provide relief for thousands of workers who are struggling with rising living costs.
| Personal Circumstances | Current | Budget 2025 |
| Single or widowed persons or surviving civil partner without qualifying children | €42,000 | €44,000 |
| Single or widowed persons or surviving civil partner qualifying for Single Person Child Carer Credit | €46,000 | €48,000 |
| Married or in a civil partnership (one spouse or civil partner with income) | €51,000 | €53,000 |
| Married or civil partnership (both spouses or civil partners with income) | €51,000 + the lower of €33,000 or the income of the 2nd earner | €53,000 + the lower of €35,000 or the income of the 2nd earner |
Tax Credits
Increases to the following tax credits:
| Tax Credit | Current | Budget 2025 |
| Personal tax credit | €1,875 | €2,000 |
| Employee PAYE tax credit | €1,875 | €2,000 |
| Earned income tax credit | €1,875 | €2,000 |
| Home carer tax credit | €1,800 | €1,950 |
| Single person child carer credit | €1,750 | €1,900 |
| Incapacitated child tax credit | €3,500 | €3,800 |
| Dependent relative tax credit | €245 | €305 |
| Blind person’s tax credit | €1,650 | €1,950 |
- Sea-going Irish Naval Service personnel tax credit of €1,500 extended for five years to the end of 2029.
These changes are designed to leave more money in the hands of workers and families, addressing inflationary pressures while promoting economic activity.
Universal Social Charge (USC)
The Universal Social Charge (USC), often seen as a significant financial burden on workers, sees a welcome reduction in Budget 2025.
| Current income bands (annual) | Current USC rate | Budget 2025 income thresholds | Budget 2025 USC rate | 2024 vs 2025 |
| €0 - €12,012 | 0.5% | €0 - €12,012 | 0.5% | No change |
| €12,013 - €25,760 | 2% | €12,013 - €27,382 | 2% | Increase of ceiling by €1,622 |
| €25,761 - €70,044 | 4% | €27,383 - €70,044 | 3% | Down 1% |
| €70,044+ | 8% | €70,044+ | 8% | No change |
| Non-PAYE income that exceeds €100,000 | 3% surcharge | Non-PAYE income that exceeds €100,000 | 3% surcharge | No change |
- USC Cut: The 4% rate has been reduced to 3%, benefiting a wide range of income brackets. This is the second year in a row that the government has reduced this rate, demonstrating its commitment to lightening the tax load for workers.
- Threshold Adjustment: To align with the increased national minimum wage, the entry threshold to the new 3% rate is raised by €1,622 to €27,382, ensuring those on lower incomes are not disproportionately affected by the USC.
These measures are expected to provide meaningful relief for workers, particularly those on minimum wage and middle incomes.
Pay Related Social Insurance (PRSI)
| Pre 1 Oct 2024 | Rate from 1 Oct 2024 | 2025 | 2026 | 2027 | 2028 | Total change | |
| Employer PRSI | 4% | 4.1% | 4.2% | 4.35% | 4.5% | 4.7% | 0.7% |
| Employer PRSI (lower rate) | 8.8% | 8.9% | 9% | 9.15% | 9.3% | 9.5% | 0.7% |
| Employer PRSI | 11.05% | 11.15% | 11.25% | 11.4% | 11.55% | 11.75% | 0.7% |
| Self-employed PRSI | 4% | 4.1% | 4.2% | 4.35% | 4.5% | 4.7% | 0.7% |
2. Pensions
Increase to the standard fund threshold (SFT)
• Increase to standard fund threshold to €2.8 million over a multi-year period announced on 18 September along with the publication of a report by an independent expert.
• SFT threshold to increase to €2.8 million by 2029 (€200k increase per annum from 2026 to 2029).
• Lump sum capped at €500k (currently taxed as follows: €200k tax-free, €300k @ 20%, excess @ marginal rate) and uncoupled from SFT (previously 25% of SFT).
Automatic Enrolment Retirement Savings Scheme
• Tax treatment to be included in Finance Bill 2024.
• Commencement date is 30 September 2025.
3. Other Employment measures
Small benefit exemption
• Increased in total annual limit from €1,000 to €1,500.
• Five non-cash benefits may be provided in a single year (previously two) BIK – motor vehicles.
• Temporary universal relief of €10,000 applied to the Original Market Value of a vehicle to be extended for another year.
• BIK exemption for the provision of electric vehicle chargers at the home of a director or employee.
4. Housing/property related measures
Rent tax credit
• Credit to be increased from €750 to €1,000 for 2024 and 2025.
Mortgage interest relief
• Mortgage interest relief tax credit (max €1,250) – to be extended to provide relief for increase in interest paid in 2024 over 2022.
Help-to-buy
• Extended to 2029.
Pre-letting expenditure in respect of vacant premises extension
• Relief (deduction capped at €10k) to be extended for a further three years to the end of 2027.
Vacant homes tax
• Rate to increase from 5 times to 7 times the property’s existing base LPT rate.
• Will take effect from chargeable period commencing 1 November 2024.
Residential Zoned Land Tax
• First liability date – 1 February 2025.
• Amendments to be proposed in Finance Bill 2024 to:
- Provide opportunity for zoned landowners to seek a change to zoning in 2025 to reflect the economic activity they undertake on the land.
- 12-month deferral of RZLT liability between date of grant of planning and commencement of development.
- Exemption during Judicial Review proceedings brought by a third party.
- Other technical amendments.
5. Measures to support businesses
Reducing complexity and boosting Ireland’s attractiveness.
Participation exemption
• Participation exemption for foreign dividends to come into effect on 1 January 2025.
• Further work in coming year on geographic scope and foreign branch exemption.
Consultation on the tax treatment of interest in Ireland
• Consultation published on 27 September 2024 and will close on 30 January 2025.
• Seeks to reduce complexity.
R&D tax credit
• Review of R&D tax credit to take account of increasingly digitised world over the coming year.
• Increase in first payment threshold in the R&D tax credit from €50k to €75k.
EIIS / SURE / SCI
• Dept of Finance completed review of the Employment Investment Incentive Scheme, the Start-Up Relief for
Entrepreneurs and the Start-Up Capital Incentive
• Extension of all three schemes for a further two years to the end of 2026.
• Amount an investor can claim relief on under EIIS to double from €500k to €1m.
• Increase of the relief available under the Start-up relief for entrepreneurs from €700k to €980k.
“Angel investor relief”
• Increase in lifetime limit on gains to which reduced CGT rate will apply from €3m to €10m.
• Relief to commence shortly (existing legislation is subject to a commencement order).
Section 486C – Start up relief
• Enhancement of the relief so that it can be available to small owner-managed start-up companies.
Relief for stock exchange listing
• Tax deduction for expenses incurred wholly and exclusively on a first listing on a recognised stock exchange in
Ireland or the EU/EEA area, subject to a cap of €1 million.
CGT retirement relief
• The extension of the upper age limit to 70 announced in Budget 2024 is being retained.
• The cap of €10m in respect of a disposal to a child which was due to come into effect from 1 January 2025 will not apply where assets received by child are held for a 12-year period.
6. Agri-tax measures
Agricultural relief
• Donor will be required to meet a six-year active farmer test.
Extension of the stock reliefs to the end of 2027
• General Stock Relief.
• Stock Relief for Young Trained Farmers.
• Stock Relief for Registered Farm Partnerships.
Stamp duty measures
• Young Trained Farmers relief to be available where it is claimed by an individual farmer who carries on the farm business through a company.
• Relief for leases of farmland to apply where farmer carries on the farm business through a company.
Accelerated capital allowances – farm safety equipment
• 50% per annum over 2 years for eligible equipment. To be extended to include certain Targeted Agriculture.
Modernisation Schemes eligible safety equipment not currently supported.
Income stability measure in farming/dairy sector to be considered in advanced of Budget 2026.
7. VAT
VAT registration thresholds increase with effect from 1 January 2025.
| Current | Budget 2025 | |
| Goods | €80,000 | €85,000 |
| Services | €40,000 | €42,500 |
Gas and electricity
• Reduced VAT rate of 9% for supplies of gas and electricity extended for another 6 months to 30 April 2025.
Heat pumps
• VAT rate applicable to the installation of heat pumps to be lowered from 23% to 9%.
Farmers flat rate compensation
• Rate to be increased from the current 4.8% to 5.1% from 1 January 2025.
8. Climate Measures
VRT
• VRT amendment in respect of battery electric commercial vehicles so that they can qualify for the €200 VRT rate
• Emissions based approach for category B commercial vehicles - a lower 8% rate for category B vehicles with CO2 emission of less than 120grams per kilometre.
• Accelerated capital allowances scheme for gas and hydrogen-powered vehicles to be extended to 31 December 2025.
Emission thresholds for capital allowances
• Change in classification of low emitting company car to change with effect from 1 January 2027.
Carbon tax
• Rate per tonne of carbon dioxide emitted for petrol and diesel will increase from €56 to €63.50 from 9 October as per the trajectory set out in the Finance Act 2020.
• Rate increase to be applied to all other fuels from 1 May 2025
9. Excise
Tobacco & E-cigarettes
• Increase of €1 on packet of 20 cigarettes, pro-rata increase on other tobacco products.
• Tax on e-liquids at a rate of 50 cent per ml – to commence mid next year.
Alcohol products tax relief measure
• Extension of the excise relief introduced last year for independent small producers of cider and perry to cover certain other fermented beverages.
10. Capital Acquisitions Tax
Increase of the group thresholds:
| Group | Current thresholds | Budget 2025 threshold |
| Group A | €335,000 | €400,000 |
| Group B | €32,500 | €40,000 |
| Group C | €16,250 | €20,000 |
Agricultural relief
• Donor will be required to meet a six-year active farmer test.
11. Stamp Duty
Bank levy
• Extended to 2025, target yield to remain at €200 million
Stamp duty on residential property
• 6% rate where the value / acquisition price exceeds €1.5 million (on portion above €1.5m).
– effective 2 October 2024.
Stamp duty on certain bulk acquisitions of residential property
• Higher rate of stamp duty on the acquisition of individual residential units such as houses and duplexes (not apartments) where a person acquires at least 10 such units during any 12-month period.
• Higher rate of stamp duty to increase from 10% to 15% – effective 2 October 2024.
12. Other
Changes will be made to the tax exemptions that apply to sports bodies.
• Tax relief to be available for doners in respect of donations to sports bodies.
• Payments made to the women impacted by the failures in the CervicalCheck national screening programme to be exempt from income tax, CGT and CAT.
• Enhancements of reliefs available to the audio-visual sector.
• New tax credit for Unscripted Production.
• Increase in tax credit under s481 for certain feature film productions.
• Reduction in Motor Insurers Insolvency Compensation Fund Levy from 1% to 0%.
• The review of the funds sector which was announced last year has concluded and the findings are due to be published shortly. The next steps are expected to be outlined once the report has been given due consideration.
This comprehensive package of measures in Budget 2025 reflects the government's response to the challenges facing Irish households and the broader economy, balancing short-term relief with long-term investment.
Finance Bill expected Thursday 10 October 2024.