Minister for Finance Jack Chambers and Minister for Public Expenditure Paschal Donohoe have announced the Budget for 2025, with a raft of measures aimed at putting the country on a "firm footing for the future".
A summary of the key announcements include:
Social Welfare
· Double payments for some social welfare recipients in October
· €12 increase for those receiving a weekly Social Protection payment
· Carer's allowance means test disregard to increase to €625 for a single person and €1,250 for a couple
· Domiciliary care allowance to increase by €20 and carer's support grant to rise by €150 to €2,000
Cost of Living Measures
· Energy credit of €250 for all households to be paid in two equal payments, one before the end of 2024 and one after
· Proposal for the 9% reduced VAT rate for gas and electricity to be extended for another six months to 30 April 2025
· Further €300 lump sum payment to fuel allowance recipients in November
· Additional €200 for recipients of the living alone allowance
Education & Children
· Free schoolbooks initiative extended to transition and senior cycle pupils
· Funding to continue for the school transport fee reduction and State exam fee waiver
· Continued reduction of student contribution fee by €1,000
· Once-off reduction of 33% in contribution fee for apprentices in higher education
· Post-graduate tuition fee contribution increase of €1,000 for student grant recipients
· Double payments of child benefit in November and December
· Double payment of the foster care allowance
· €400 lump sum payment for working family payment recipients
· €100 lump sum payment per child to recipients of qualified child increase payments
· New 'baby boost' one-off payment of €420 for each newborn child from 1 January
Housing
· The rent tax credit offered to tenants will rise from €750 to €1,000, and to €2,000 for a jointly assessed couple
· An additional €1.25bn will be made available to the Land Development Agency, bringing the total amount of funding for the LDA to €6.25bn
· Help to Buy scheme will be extended until the end of 2029
· Properties worth over €1.5m to pay 6% stamp duty
· Existing 1% stamp duty to apply to values up to €1m and 2% above €1m
· Relief for pre-letting expenses for landlords extended for three years until the end of 2027 to help vacant property owners bring accommodation into the
rental system
· Vacant homes tax increased from five to seven times the property's existing base Local Property Tax rate
Taxation
· The USC will be cut from 4% to 3% on incomes of €25,000 to €70,000, the second consecutive reduction to the USC rate
· The national minimum wage will increase by €0.80 to €13.50 per hour from 1 January 2025
· Entry threshold to 3% rate increased by €1,622 to €27,382
· The main tax credits - the Personal, Employee and Earned Income Credits - will increase by €125
· The Standard Rate Cut Off Point will increase by €2,000 to €44,000, with proportionate increases for married couples and civil partners
· Inheritance tax will increase for all thresholds - Group A up from €335,000 to €400,000, Group B up to €40,000 and Group C up to €20,000
· Exemption from Income Tax, Capital Gains Tax and Capital Acquisitions Tax on payments made to women impacted by Cervical Check failures
Inheritance Tax
· The Group A threshold for CAT - which includes gifts or inheritance from parents to their children - will rise from €335,000 to €400,000
· The Group B threshold - which includes gifts or inheritances from siblings, aunts / uncles etc. - will rise from €32,500 to €40,000
· The Group C threshold - which includes gifts and inheritances from all other non-blood relatives - will rise from €16,250 to €20,000
Pensions
· The auto-enrolment pension scheme will begin on 30th September 2025. This scheme will mean that around 800,000 workers will automatically be enrolled into a private pension scheme, in addition to their state pension. People who do not have a pension scheme; are aged between 23 and 60; and who earn more than€20,000 will be automatically enrolled. People outside of this range will not be automatically enrolled but will be able to opt in. Under the scheme, employees will contribute 1.5% of their gross salary during the first three years of paying in. This will rise to 3% from the third year on, 4.5% from year six on, topping out at 6% from year 10 on. The state will contribute €1 for every €3 contributed by the participant, and for every €3 that an employee contributes, the employer will have to contribute €3.
· Finance Bill 2024 will provide for the taxation of the Automatic Enrolment Retirement Savings Scheme (referred to as AE). The tax treatment aligns as much as possible with that of Personal Retirement Savings Accounts (PRSAs), other than for employee contributions. Employer contributions are tax relieved, the growth in the AE funds is exempt from tax and the AE funds are taxed on draw down, other than a 25% lump sum. The lump sum can be taken tax free up to €200,000,is taxed at 20% between €200,000 and €500,000 and is taxed at 40% above€500,000. As the State is making a direct contribution for employees within the AE scheme, there is no tax relief being provided for employee contributions to AE.
· The standard fund threshold was last changed in 2014, when it was reduced from €2.3million to €2 million. This will be increased to €2.8 million in four equal phases between 2026 and 2029.
