| Budget 2025 was delivered today against the backdrop of continued pressures on household budgets, but also with one eye squarely on securing votes in the upcoming General Election by putting more money in taxpayers’ pockets.
 The raft of measures includes an increase in the entry point for the higher rate of tax, a reduction in USC, a number of increases in social welfare payments and several once-off payments to deal with the cost-of-living pressures.
The need to address capacity and infrastructure issues in the longer term in every area of the economy is still a pressing issue for the Government and will remain so for the foreseeable future. The Minister for Finance has set aside €3 billion for additional infrastructure spending “to address the known challenges that we face in housing, energy, water and transport infrastructure.” |
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| The key changes announced in Budget 2025 are: |
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| To further combat the ongoing pressures on household budgets, the Minister for Finance announced the expected €2,000 increase in the standard rate cut off band for all taxpayers, in addition to a range of increases in various tax credits. The middle rate of USC will be reduced from 4 percent to 3 percent. The now usual change in the USC bands to ensure that the increased minimum wage remains outside the middle rate of the USC also featured. These changes will take effect from 1 January 2025.
Changes to the small benefit exemption, an issue on which the Institute has extensively lobbied, also featured with the value limit to increase to €1,500 and the number of benefits that an employer can give to increase from two to five per year. |
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| Enhancements to the research and development (R&D) tax credit, and start-up relief for companies were the main features. A new corporation tax relief is to be introduced for expenses incurred on an initial stock market listing. As expected, the new participation exemption for foreign sourced dividends will commence from 1 January 2025. |
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| Capital taxes and reliefs |
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| The Minister announced the first increases to the capital acquisitions tax (CAT) group thresholds since October 2019. In addition, a range of changes and enhancements are being made to retirement relief, the new angel investor capital gains tax (CGT) relief, and the reliefs for investments in corporate trades, whilst the active farmer test for CAT agricultural relief is being extended to the disponer. |
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| Housing and property measures |
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| Budget 2025 saw the announcement of a series of tax measures to benefit both prospective buyers in addition to renters, alongside the announcement of €1.25 billion in additional funding to accelerate the building of new homes by the Land Development Agency. Stamp duty rates were also increased for higher value residential properties and bulk purchases, effective from today. |
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| Childcare and household measures |
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| An additional €1.37 billion in funding for childcare provision and extended mortgage interest tax relief for a further year were the main features. The 9 percent rate of VAT on gas and electricity will continue until April 2025. |
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| The announcements featured a range of supports in recognition of the importance of agriculture and the agri-food sector in the economy. |
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| “Greening” the tax system |
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| A range of measures to further the transition to an ever “greener” economy were also announced which included the expected €7.50 increase to carbon tax, a reduced VAT rate for heat pumps, and a new benefit in kind exemption for electric vehicle charging facilities. |
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| In addition to the targeted VAT supports announced under the banner of cost of living and supporting climate action, the VAT registration thresholds will also increase for a second year in a row. The flat rate compensation for farmers who are not registered or required to register for VAT will also increase. |
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| Excise and miscellaneous announcements |
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| The main measures announced were the now usual annual Budgetary increases in excise duty for tobacco products, and the expected announcement of a new duty on e-cigarettes and vaping. The bank levy was also extended to 2025. |
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