Ireland's Budget 2025

| Image Credits: Minister for Public Expenditure Paschal Donohoe and Minister for Finance Jack Chambers

Ireland recently made headlines after receiving €13 billion from the high-profile Apple case. However, the Irish government clarified that this windfall will not affect Budget 2025, as the budget’s parameters were set beforehand. Regardless, Budget 2025, unveiled on October 1, 2024, includes substantial spending increases and several tax cuts.

Here are some of the the key announcements related to Tax from Ireland’s Budget 2025, presented by Minister for Finance Jack Chambers and Minister for Public Expenditure Paschal Donohoe.

SOCIAL WELFARE

• Largest social protection package in the State’s history, worth nearly €2 billion described as the largest in the history of the State. 

COST OF LIVING

• A €2.2 billion cost-of-living package to support the vulnerable. 

• Energy credit of €250 to be paid in two installments, one in 2024 and one in 2025.

• VAT reduction for gas and electricity at 9% extended until April 2025.

• €300 lump sum payment to fuel allowance recipients in November.

• Additional €200 for living alone allowance recipients.

CIGARETTES, VAPES, AND ALCOHOL

• Excise duty on cigarettes increased by €1 per pack (now €18.05).

• Excise on vapes: 50 cents per ml of e-liquid; a typical disposable vape to cost €9.23.

• No increase in excise duties on alcohol.

HOUSING

• Rent tax credit raised from €750 to €1,000; €2,000 for couples.

• Additional €1.25 billion for the Land Development Agency, totaling €6.25 billion.

• Help to Buy scheme extended until 2029.

• Stamp duty of 6% on properties valued over €1.5 million.

• Vacant homes tax raised to seven times the Local Property Tax rate.

TAXES

• The Universal Social Charge (USC) reduction: Cut from 4% to 3% on incomes between €25,000 and €70,000.

• National minimum wage to rise by 80 cents to €13.50 per hour starting January 2025.

• Main tax credits (Personal, Employee, and Earned Income) increased by €125.

• Inheritance tax thresholds increased across Group A, B, and C.

• The 2024 revisions to the bank levy, now extended into 2025, continue to target the financial sector.

• Participation exemption for foreign-sourced dividends is set to be introduced, taking effect on January 1, 2025. Under this new regime, dividends received from subsidiaries based in EU/EEA countries or those within tax treaty jurisdictions will be exempt from taxation.

• The VAT registration thresholds for businesses will increase to €42,500 for services and €85,000 for goods.

CLIMATE-RELATED MEASURES

• Carbon tax increase of €7.50 per tonne (now €63.50/tonne) on petrol and diesel.

• Battery electronic commercial vehicles eligible for a €200 vehicle registration tax rate.

The measures described in this article are part of the proposals expected to be implemented in the forthcoming Finance Act. However, it is important to note that changes may be made before these provisions are formally enacted. 

SOURCES/ RECOMMENDED READ: 

• gov.ie - Budget 2025 (www.gov.ie) 

• At a glance: Here are the key points from Budget 2025 (rte.ie) 

• Budget 2025 Summary and key changes | Davy