Introduction
The Budget 2025 offers substantial fiscal adjustments, with a projected surplus of €25 billion for 2024, focusing on tackling inflation, housing challenges, and supporting middle-income earners. Below is a summary of some of the key highlights from the budget, including LIA’s comprehensive guide of the budget which was produced by economist Jim Power.
1. Pensions and Retirement
- Auto-Enrolment Pension Scheme: Launching on 30th September 2025, this scheme will enroll 800,000 workers into private pensions automatically, complementing their state pensions.
- Increased Standard Fund Threshold: From 2026 to 2029, the threshold will rise from €2 million to €2.8 million in four phases, allowing higher pension savings before tax.
2. Taxation Changes
- Capital Acquisition Tax: The Group A threshold for children inheriting from parents increases from €335,000 to €400,000.
- Income Tax and USC: The standard rate tax band increases to €44,000, while USC bands are adjusted, reducing the 4% rate to 3% for incomes between €27,383 and €70,044.
- Business Tax Relief: First-year payment thresholds in the R&D tax credit increase, and start-up reliefs are extended until 2026.
3. Housing and Renters
- Rent Tax Credit: Increased to €1,000 for individuals and €2,000 for couples.
- Mortgage Interest Relief: Extended for homeowners, allowing relief on interest paid in 2024.
4. Business Support and Investment
- Capital Gains Tax Relief: Lifetime limit for gains eligible for relief increases to €10 million, supporting investors in start-ups.
- Stock Exchange Listing Relief: New relief for companies listing on Irish or European exchanges, with a cap of €1 million.
- Employee Gift Exemption: The small benefit exemption, which allows employers to provide non-cash gifts without a tax liability, has been increased from €1,000 to €1,500.
5. Cost of Living and Welfare
- Electricity Credit: A €250 credit paid in two installments, plus additional fuel allowances and double child benefit payments.
- Welfare Payments: A €12 increase for pensioners and social welfare recipients, with nearly €2 billion in additional welfare spending for 2025.