Ireland Budget 2025: Key Tax and Business Changes

Ireland Budget 2025: Key Tax and Business Changes

Income Tax Bands
The standard rate income tax band will increase by €2,000 to €44,000 for a single person.
Married couples and civil partners will see proportionate increases.

Tax Credits

Several tax credits will see an increase:

Personal Tax Credit: Increased by €125 to €2,000.
Employee Tax Credit: Increased by €125 to €2,000.
Earned Income Tax Credit: Increased by €125 to €2,000.
Other increases include:Blind Tax Credit: Up by €300 to €1,950.
Dependent Relative Credit: Up by €60 to €305.
Home Carer Credit: Up by €150 to €1,950.
Incapacitated Child Credit: Up by €300 to €3,800.
Single Person Child Carer Credit: Up by €150 to €1,900.
Rent Tax Credit: Increased to €1,000 for 2024 and 2025.

Universal Social Charge (USC)
The 4% USC rate will reduce to 3% from 1 January 2025.
The entry point for this rate will increase by €1,622, aligning with the national minimum wage increase.
The new USC rate will apply to incomes between €27,382 and €70,044.

Capital Acquisitions Tax (CAT)
Group A threshold: Increased to €400,000 (from €335,000).
Group B threshold: Increased to €40,000 (from €32,500).
Group C threshold: Increased to €20,000 (from €16,250).
These changes apply to gifts or inheritances received on or after 2 October 2024.

Vacant Homes Tax
The Vacant Homes Tax will increase to 7 times the basic Local Property Tax (LPT), up from 5 times.

Small Benefit Exemption
Employees can receive tax-free vouchers or non-cash benefits.
From 1 January 2025, the maximum exemption increases to €1,500 (up from €1,000).
Employees can now receive up to 5 non-cash benefits per year (up from 2).
Carbon Tax
Petrol and diesel carbon tax will increase from €56 to €63.50 per tonne from 9 October 2024.
The increase will apply to all other fuels from 1 May 2025.

Value Added Tax (VAT)
VAT on heat pumps will reduce to 9%.
The 9% VAT rate on gas and electricity will be extended until 30 April 2025.
Excise Duty
Cigarettes: The price of a 20-pack increases by €1 from 2 October 2024.
E-cigarettes: A new excise duty of €0.50 per ml of e-liquid will apply from mid-2025.

Cervical Check Payments : 
Payments to women affected by CervicalCheck failures will be exempt from income tax, Capital Gains Tax, and Capital Acquisitions Tax.
Employment & Business
The Department of Enterprise, Trade and Employment will receive a €1.03 billion allocation for 2025.

National Minimum Wage
The minimum wage will increase by €0.80 to €13.50 per hour from 1 January 2025.
These changes aim to support households, encourage business investment, and enhance economic growth in Ireland.