Starting from today, 1 January 2025, taxpayers all over Ireland will begin to see the benefits of Budget 2025.
The €1.6 billion package, unveiled in October, includes key measures designed to assist lower and middle-income earners. These include increases in tax credits, reductions in the Universal Social Charge (USC), and other changes aimed at easing the cost of living for renters and families.
One of the standout changes is the increase in the standard rate cut-off point, which jumps from €42,000 to €44,000 starting today, with proportional increases for married couples and civil partners.
The personal, employee and earned income tax credits will also rise by €125 to €2,000, while several other credits benefiting families and carers will see boosts. These include the Home Carer Tax Credit, now worth €1,950, and the Single Person Child Carer Credit, which rises to €1,900.
With these increases, a single person earning €20,000 or less in 2025 will no longer pay income tax, while those on lower incomes will see a reduction in their tax bills.
Another significant change is the reduction in the USC rate, with the 4% cut now 3% – its second consecutive decrease. This coincides with the national minimum wage increasing by 80 cent per hour to €13.50, ensuring minimum wage workers remain outside the higher rates of USC. The new threshold for the 3% USC rate will be raised by €1,622 to €27,382.
Renters are set to benefit as well, with the Rent Tax Credit for 2025 increasing to €1,000, or €2,000 for jointly assessed taxpayers. Additionally, the Rent Tax Credit for 2024 has been retrospectively increased to €1,000, allowing eligible tenants to claim an additional €250 or €500.
In a bid to promote the use of electric vehicles, Budget 2025 has introduced a benefit-in-kind exemption for the installation of home chargers for battery electric vehicles by employers. This will be applicable to both directors and employees, facilitating more people to access the infrastructure. The Finance Act 2024 has also revised the weight ratio requirement for commercial EVs, enabling more vehicles to qualify for the €200 category C Vehicle Registration Tax rate, which comes into effect today.
Euro banknotes are lying on a table in this photo illustration taken
(Image: Jonathan Raa/NurPhoto via Getty Images)
Minister Chambers commented today: “Several of the changes which I announced in Budget 2025 take effect from 1 January 2025. This includes a substantial personal tax package of €1.6 billion. With increases to the main tax credits and the standard rate cut-off point, together with reductions in USC, this package is primarily aimed at supporting those on lower and middle incomes, and builds on the progress already made by Government over its term. A number of tax credits are increasing to support individuals and families with caring responsibilities. My budget package will be of direct benefit for all those who pay income tax.”
“As a result of the cumulative increases to the main tax credits, a single person earning €20,000 or less in 2025 will now be outside of the income tax net. As part of the continued support of renters, particularly with cost of living pressures, the value of the Rent Tax Credit is increasing to €1,000 for 2024 and 2025.
“I also announced two changes in Budget 2025 to incentivise the uptake of electric vehicles. The exemption so that a director or employee will not pay BIK on the installation of a home charger, and the amendment of the weight ratio requirement for commercial electric vehicles to qualify for the €200 category C VRT rate will also be effective from 1 January.”
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