Irish Budget 2025 Updates; Key Takeaways and Important Points

This guide provides the most important updates of Budget 2025. Whether you’re a business owner, a taxpayer, or simply interested in Ireland’s financial future, this guide will break down the essentials of Budget 2025.

As Ireland prepares for the upcoming year, Budget 2025 has unveiled a comprehensive set of measures aimed at addressing the pressing economic challenges faced by households and businesses alike. Announced on October 1, 2024, this budget package features significant investments in welfare, infrastructure, and public services, while also introducing vital tax reforms. With a focus on enhancing living standards, supporting vulnerable groups, and fostering economic growth, the budget reflects the government’s commitment to creating a more sustainable and equitable future for all citizens. In this blog post, we’ll delve into the key takeaways and important points from Budget 2025, highlighting the initiatives that will shape Ireland’s economic landscape in the coming year.

Let’s dive into the most important details of Budget 2025, dissecting the proposed tax changes, social welfare enhancements, and other important aspects. 

10 Important Updates of Ireland Budget 2025

#1: Cost of Living Package: A €2.2 billion cost of living package to support households and businesses
#2: Minimum Wage Increase: Minimum wage to rise by 80c to €13.50 per hour starting January 1, 2025
#3: Welfare Payment Increases: All welfare payments, including pensions, will increase by €12 per week
#4: Universal Social Charge Changes: The entry level for the new 3% USC rate is increased by €1,622 to €27,382
#5: Energy Credit: A €250 universal energy credit will be issued over three payments
#6: Child Benefit Payments: Two double child benefit payments totaling €280 per child will be made in November and December
#7: Rent Tax Credit Increase: Rent tax credit rises by €250 to €1,000 for individuals and €2,000 for jointly assessed couples
#8: Infrastructure Investment: €3 billion allocated for infrastructure improvements, focusing on water and energy facilities
#9: Health Budget Increases: Significant budget increases for health services, including a 22% rise for acute hospitals to €9.8 billion
#10: Excise Duty Changes: An increase of €1 in excise duty on cigarettes, with a new vaping tax of 50c per ml introduced from mid-2025

Income Tax

  • Income tax standard rate band increased by €2,000 to €44,000, with proportionate increases for single person child carers, married couples, and civil partners.
  • Personal Tax Credit, Employee Tax Credit, and Earned Income Credit raised from €1,875 to €2,000
  • Increases in various tax credits are Home Carer Tax Credit: €1,800 to €1,950, Single Person Child Carer Tax Credit: €1,750 to €1,900, Incapacitated Child Tax Credit: €3,500 to €3,800, Blind Tax Credit: €1,650 to €1,950, Dependent Relative Tax Credit: €245 to €305
  • Rent Tax Credit for 2024 increased from €750 to €1,000 (€2,000 for jointly assessed couples).
  • USC amendments are 2% USC rate band raised from €25,760 to €27,382 and 4% USC rate reduced to 3%
  • Extension of farming-related tax reliefs, including enhanced stock relief for farm partnerships, young farmers, and agricultural stamp duty relief.
  • Extension of Mortgage Interest Relief and Help to Buy scheme.
  • Tapering of BIK relief for electric vehicles deferred.
  • Small Benefit Exemption for BIK amended to allow up to five non-cash benefits annually, with a €1,500 cumulative limit.
  • Tax relief for donations to sports bodies to be introduced in the Finance Bill under specific circumstances

Business Tax

  • New participation exemption for foreign-sourced dividends from EU/EEA and tax treaty jurisdictions effective from 1 January 2025. Future plans for a foreign branch exemption are under consideration
  • Increase in the first-year R&D payment threshold from €50,000 to €75,000.
  • Introduction of a corporation tax deduction up to €1m for first-time listings on Irish/EEA stock exchanges. Stamp duty exemption for SMEs accessing equity via financial platforms is being developed, subject to State Aid approval.
  • Bank Levy extended for another year with a target yield of €200m.
  • Planned engagement with stakeholders to simplify the tax treatment of interest deductibility in Ireland.
  • Motor Insurers Insolvency Compensation Fund Levy reduced from 1% to 0%.
  • Findings from the review of the funds sector to be published soon, with next steps to follow.
  • Start-up relief for new small companies enhanced, now including small owner-managed companies.
  • CO2 emission thresholds for business car capital allowances to be lowered from 1 January 202
  • Enhanced reliefs for the audio-visual sector

Property Tax

  • Stamp duty on bulk residential property purchases increased from 10% to 15%, effective immediately
  • Stamp duty rates for high-value residential properties adjusted as 1% for amounts up to €1 million, 2% for amounts over €1 million. New 6% rate for amounts exceeding €1.5 million, with transitional arrangements for transactions in progress.
  • Vacant Homes Tax increased from five times to seven times the base rate of Local Property Tax, starting this November.
  • Exemption from Residential Zoned Land Tax (RZLT) available for landowners who rezone land for specific activities.
  • Relief for certain pre-letting expenses for landlords extended for an additional three years, now expiring at the end of 2027.

Capital Gains Tax

  • CGT relief for angel investors in innovative start-ups enhanced; lifetime limit on gains increased from €3 million to €10 million.
  • Retirement Relief upper age limit of 70 retained. Clawback introduced for disposals above €10 million within 12 years by children; full CGT abatement after 12 years.
  • EII scheme, Start-Up Relief for Entrepreneurs, and Start-Up Capital Incentive schemes extended for two years, until the end of 2026.
  • EII scheme enhanced, doubling the relief claim limit from €500,000 to €1 million.
  • Start-Up Relief for Entrepreneurs limit increased from €700,000 to €980,000.

Capital Acquisitions Tax

  • Capital Acquisitions Tax (CAT) lifetime thresholds increased as follows. Group A: from €335,000 to €400,000, Group B: from €32,500 to €40,000 and Group C: from €16,250 to €20,000
  • Agricultural relief narrowed; donor must meet a six-year active farmer test for the beneficiary to qualify for the relief

Indirect Tax

  • Temporary 9% VAT rate on gas and electricity extended until 30 April 2025.
  • VAT registration thresholds increased to €85k for goods and €42.5k for services starting 1 January 2025.
  • Farmers’ flat-rate addition increased from 4.8% to 5.1% effective 1 January 2025.
  • Excise duty on a pack of 20 cigarettes increased by €1, with pro-rata increases on other tobacco products starting midnight 1 October; new tax on e-cigarettes and vaping products introduced in 2025.
  • 9% VAT rate to apply to the installation of certain heat pumps.
  • VRT rate of €200 to apply to certain commercial battery electric vehicles; other commercial vehicles’ VRT to be based on CO2 emissions.
  • Excise relief for independent small cider and perry producers extended to additional products.
  • Carbon Tax rate per tonne of CO2 to increase from €56 to €63.50 on 9 October for petrol and diesel, and from 1 May 2025 for other fuels

Housing and Property

  • Rent tax credit rises by €250, reaching €1,000 for individuals and €2,000 for joint filers.
  • Help to Buy scheme extended to 2029
    Mortgage interest relief extended to 2025
  • Landlord pre-letting tax relief extended to 2027
  • Properties over €1.5 million will face a 6% stamp duty

Cost of Living Support

  • €2.2 billion cost of living package.
  • Energy credit of €250 spread over three payments.

Welfare and Social Supports

  • All welfare payments, including pensions, to increase by €12 per week.
  • Two double child benefit payments of €280 per child in November and December
  • Parents of newborns to receive a one-time triple child benefit payment
  • October bonus double payment for welfare recipients, plus a Christmas welfare bonus
  • Disability support grant of €400, carers support grant of €400, and fuel allowance payment of €300
  • Child support grant of €100 for those receiving qualified child increase payment.

Education

  • Free schoolbooks extended up to Leaving Cert.
  • 1,500 additional special needs assistants and 350 more special classes
  • Junior Cert and Leaving Cert fees waived
  • Total of €100 million in supports for third-level education
  • Student and apprentice fees reduced by €1,000; postgraduate fee contribution increased to €5,000

Health and Social Care

  • Free hormone replacement therapy and expansion of IVF schemes to include donor-assisted treatment.
  • Pay Related Benefit introduced for higher welfare payments based on work history
  • Junior Cert and Leaving Cert fees waived
  • Acute hospitals budget rises by 22% to €9.8 billion, mental health budget increased to €1.48 billion
  • Palliative care, older person services, and National Ambulance Service budgets receive significant increases

Energy, Environment, and Infrastructure

  • €3 billion infrastructure investment for water and energy facilities.
  • Reduced 9% VAT on electricity and gas extended until April 2025
  • Carbon tax rate for petrol and diesel rises by €7.50 per tonne
  • Ports to receive investment for offshore renewable energy industry development

Public Transport

  • Free public transport for children under nine from summer 2025.
  • Universal companion pass for people over 70 to bring a friend on public transport

Law and Order

  • Recruitment of 800-1,000 new Gardaí, with training allowances increased.
  • 400 new staff to be recruited to the International Protection Office
  • 1,100 additional prison spaces planned over the next five years

Miscellaneous

  • Cigarettes: €1 increase in excise duty; vaping tax introduced from mid-2025.
  • No excise duty increase on alcohol
  • Inheritance tax thresholds rise to €400,000
  • Support fund for regional airports, including Cork and Shannon, to promote balanced growth

These key updates from the Irish Budget 2025 cover a wide range of sectors, aiming to provide economic relief, enhance infrastructure, and improve public services across the country.

In summary, Budget 2025 marks a pivotal step in addressing Ireland’s current economic landscape, with a wide array of initiatives designed to support families, enhance public services, and stimulate growth. From increased welfare payments and tax credits to significant investments in healthcare and infrastructure, the budget reflects a commitment to improving the quality of life for all citizens. As we look ahead, these measures not only aim to alleviate immediate financial pressures but also lay the groundwork for a resilient and thriving economy. Keeping an eye on the implementation of these initiatives will be crucial as Ireland navigates the challenges and opportunities that lie ahead. 

If you have any questions about how the 2025 Budget might impact your taxes, please don’t hesitate to reach out to our expert accountants in Dublin 15. Feel free to speak to our company formation experts in Dublin 15 for a detailed consultation. TALK TO OUR ACCOUNTING EXPERTS RIGHT NOW | Call us at (087) 225 7706, 01 441 6919, or email us at Info@tascaccountants.com for any assistance.

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