Budget 2025: Key Highlights and Changes
The Irish government announced Budget 2025 on October 1, 2024, introducing several significant changes to support individuals and businesses. This budget includes adjustments to tax credits, tax bands, and various other financial measures to address the current economic climate and promote growth.
Income Tax Bands and Rates
One of the key changes in Budget 2025 is the adjustment to income tax bands. The standard rate tax band, which determines the amount you can earn before paying the higher tax rate, has increased by €2,000. This means that the band has risen from €42,000 to €44,000 for a single person. For those qualifying for the single-person child carer credit, the band has increased from €46,000 to €48,000. Married couples or civil partners with one income will see their band rise from €51,000 to €53,000, with proportionate increases for dual-income households[1].
Tax Credits
Several tax credits have also been increased to provide additional relief to taxpayers. The personal tax credit, employee tax credit, and earned income tax credit have all risen from €1,875 to €2,000. The home carer tax credit has increased from €1,800 to €1,950, and the single-person child carer tax credit has gone up from €1,750 to €1,900. Additionally, the incapacitated child credit has been increased from €3,500 to €3,800[1].
Universal Social Charge (USC)
Changes to the Universal Social Charge (USC) include adjustments to the thresholds and rates. The income threshold for the 2% rate has increased from €25,760 to €27,382, while the 4% rate now applies to income from €27,382.01 to €70,044. Income above €70,044 remains subject to the 8% rate[2].
Other Notable Changes
- Rent Tax Credit: The rent tax credit has increased to a maximum of €1,000 per individual and €2,000 per jointly assessed couple. This increase applies retrospectively for 2024 and is available for 2025[3].
- Small Benefit Exemption: From January 1, 2025, the number of annual vouchers or benefits exempt from tax is increasing from two to five, and the exemption limit is rising from €1,000 to €1,500[1].
- Mortgage Interest Relief: The mortgage interest tax credit introduced in Budget 2024 has been extended to 2025, calculated on the increase in interest paid in 2024 over 2022[1].
Conclusion
Budget 2025 introduces several measures to provide financial relief and support economic growth. The adjustments to tax bands, increases in tax credits, and changes to the USC are aimed at easing the financial burden on individuals and families. The enhancements to the rent tax credit, small benefit exemption, and mortgage interest relief reflect the government’s commitment to housing affordability and supporting homeownership. These changes collectively aim to create a more equitable and supportive financial environment for all taxpayers in Ireland.
[1]: Budget 2025 Summary [2]: Citizens Information – Budget 2025 [3]: Gov.ie – Budget 2025 Tax Changes
References