Here are the key points from the Irish budget 2025.

The Irish Budget 2025, released on October 1st 2024, has been broadly welcomed. It offers a mix of: tax cuts; changes to income tax bands, credits and USC; increased spending on infrastructure; and measures to support businesses and workers. Measures include a Cost-of-Living Package, taxation changes and changes to the VAT thresholds.

€3 billion is being made available for investing in infrastructure spending, including water, housing and electricity grid infrastructure. €4.1 billion will be transferred to the Future Ireland Fund. This investment is expected to create jobs and stimulate economic growth.  

A social protection package worth almost €2bn was announced and funding for health includes provision for 495 new beds and an increased workers in that area.

Budget 2025’s key objectives were to:

• To support households and workers;
• To support Government commitments on housing;
• To support businesses;
• To support Climate Action;
• To help with the cost of living.

From income tax changes to measures for businesses, the budget aims to put a little money back in everyone’s pocket – but has disappointed businesses in some areas. Here’s our round-up.

Budget 2025: Business highlights

Small benefits exemption: One interesting and unexpected change is the small bonus exemption going from €1,000 to €1,500 total per annum for employees, says Paul O’Donovan. From 1 January 2025, the exemption limit is increasing to €1,500 and the number of annual benefits this can be spread over is increasing from the first two to the first five. 

Increased R&D credit: A positive for businesses in this year’s Budget is the change to the research and development (R&D) credit, with an increase in the first-year payment threshold from €50,000 to €75,000 

Incentives and reliefs: The Employment Investment Incentive, the Start-Up Relief for Entrepreneurs and the Start-Up Capital Incentive have been extended for 2 more years to the end of 2026. The Employment Investment Incentive is being doubled to €1 million and the Start-Up Relief for Entrepreneurs is increasing from €700,000 to €980,000.

Retirement relief: The upper age limit will rise from 65 to 70 to reflect current work practices. If the child or children retains the assets for more than 12 years, the CGT will be fully abated. Where there are disposals above €10 million within 12 years of receiving the assets, a clawback of the relief will apply. 

VAT thresholds rise: Smaller businesses will welcome the increased VAT registration thresholds (goods, from €80,000 to €85,000, and services, from €40,000 to €42,500).

Hospitality VAT remains unchanged: Not everyone got good news on the VAT front in this budget and those in hospitality will be disappointed. Despite calls for the reinstatement of the 9% VAT rate, it remains at 13.5%. The 9% VAT rate for gas and electricity supplies is however extended for six months until 30 April 2025.

Payroll changes: The national minimum wage will increase by 80 cent to €13.50 per hour from 1 January 2025. The auto-enrolment pension scheme will begin on 30 September 2025. Tax credits will increase in many areas; payroll need to be on top of these and other changes.

Income tax: The Universal Social Charge (USC) decreases for the second time in a row, with a cut from 4% to 3% on incomes of €25,000 to €70,000. The entry threshold to 3% rate will increase by €1,622 to €27,382. The combination of tax band widening, USC rate reductions, increased tax credits, and a higher minimum wage is expected to boost take-home pay for many individuals.

Tax credits: A welcomed increase in a wide rage of tax credits were also announced:  

Mortgage Interest Relief: The Mortgage Interest Tax Credit introduced in Budget 2024 for taxpayers who make payments in respect of a qualifying loan for a principal private residence is being extended to 2024. The relief will be calculated on the increase in interest paid in 2024 over interest paid in 2022. The value of the credit and all qualifying criteria remain unchanged.

The Irish Budget 2025 has been generally well-received by businesses. The focus on tax relief, infrastructure investment, and sustainability aligns with the needs of many businesses and in promoting economic growth. While there were more ambitious measures hoped for in some areas, such as housing and assisting businesses with the increased cost of wages, this year’s budget is broadly business friendly.

Other highlights of Budget 2025 

Inheritance tax thresholds increase

The amount that a person can receive as a gift or inheritance from a relation before having to pay Capital Acquisitions Tax will increase:

• The Group A threshold (parents to child) will rise from €335,000 to €400,000
• The Group B threshold (siblings and immediate family) – will rise from €32,500 to €40,000
• The Group C threshold (extended family) will rise to €20,000

For more on gifting and inheritances, see our guide. When considering options we strongly recommend consulting a professional to get up-to-date professional advice on the legal and tax implications of the gift that addresses your specific circumstances.

Housing and homes

A commitment has been reaffirmed for €3.2 billion in capital spending on housing, including social and affordable initiatives.

• The renters’ tax credit will be topped up by €250 to €1,000 per renter for this year and will stay at that level for 2025.
• The Help to Buy scheme will be extended until the end 2029.
• Stamp duty for bulk purchasers of homes will rise from 10%t to 15%, with immediate effect, and a new “mansion tax” of 6% stamp duty has come in on properties worth €1.5 million or more.
• The vacant homes tax will increase from five to seven times a property’s property tax rate from November.

Further Budget 2025 reading

• The budget is available at Gov.ie

• Budget 2025 coverage is available from RTE

• The Irish Times has released an income tax calculator.