Budget 2025 round-up: Everything you need to know about social welfare hikes, ‘mansion tax’ and tax credits

Included in the raft of measures is an increase in the entry point for the higher rate of tax, a number of hikes in social welfare payments and a series of once-off payments to deal with the cost of living.

Among the notable measures are the cutting of the Motor Insolvency Compensation Fund levy to 0pc, a new “mansion tax”, hikes of €12 to social welfare payments and an increase in the cost of your typical vape.

Below you will find everything you need to know:

Tax

• The entry point for the 40pc top rate of tax is expected to increase by €2,000 to €44,000. This means workers will pay 20pc tax on all earnings up to this point.
• The 4pc USC will be reduced to 3pc, with he entry point rising to €27,382.
• Personal tax credit increases will include: €125 personal tax credit, €150 home carer tax credit, €150 single person child carer tax credit, €300 incapacitated child tax credit, €300 blind person’s tax credit.
• There will also be significant ­changes to inheritance tax, allowing children to inherit up to €400,000 from their parents tax-free. Grandchildren will be able to inherit €40,000 tax-free, and the threshold for siblings will be €20,000.
• Stamp duty on the bulk purchase of homes will increase to 15pc as part of a clampdown on vulture funds. The Residential Zoned Land Tax will go ahead as planned next year but farmers will be excluded following Coalition tensions on the issue.

Cigarettes and Vapes

A new tax on vapes and e-cigarettes will also come into effect, raising the price on the products. The tax on a packet of cigarettes will increase by €1. This will bring the price of cigarettes in the most popular price category to €18.05, which will come into effect overnight. The price of a typical vape will go up by €1.23 to €9.23, but this will not kick in until the middle of next year.

Welfare

• There will be increases of €12 in the weekly rates for people in receipt of weekly social protection payments.
• A double payment will be made to recipients in both October and December.
• The over-70s are to benefit from a new “bring a friend” expansion of the free travel scheme.
• Parents of newborns will receive a special one-off baby boost of €420, while ministers have also agreed a €15 weekly increase in maternity, paternity and parents’ benefit.
• The Carer’s Allowance means-test disregard for a single person has been doubled to €1,250 for a couple.

Cost-of-living package

• Measures are set to include: Two double payments of Child Benefit in November and December; A double payment of all welfare rates in October and December; A €400 lump sum for those in receipt of the working family payment.
• Every household will receive two energy credits of €125, worth a total of €250, between end of the year and start of next year.
• There will be a bonus payment of €200 for people in receipt of the Living Alone allowance.
• The Fuel Allowance will be extended to over-66s and there will also be a €300 lump-sum payment for recipients of the benefit as part of the Budget’s €2bn cost-of-living package.
• Reduced 9pc VAT rate for gas and electricity for another six months for businesses and households.

Climate

• Carbon tax rises by €7.50 per tonne on petrol and diesel from October 9, and on heating fuels from May 1, 2025. It will add around €19.40 to a 900 litre tank of home-heating oil, 89 cent to a 40kg bag of coal and €16.86 to an average annual gas bill. A 60 litre fill of diesel will cost €1.48 more and a fill of petrol will cost €1.28 more.
• Vat charged on heat pumps will be lowered from 23pc to 9pc.
• Battery electric commercial vehicles can qualify for €200 VRT rate.
• The benefit-in-kind tax relief for employees provided with company cars that are electric models remains. It will be extended to the provision of chargers at their home.
• €90m will be made available to retrofit social homes for 2025.
• The total carbon tax revenue for investment is now at 951m, half of which will be spent on energy efficiency in our homes.
• An additional €1.7bn for more homes, schools, for improvements in hospitals, and to tackle climate change under the National Development Plan.

Grants

• Also included in the welfare package is: a €500 bonus payment of the Disability Support Grant; a €400 bonus payment of the Carer’s Support Grant; €200 Living Alone Allowance bonus payment; and a €100 Child Support Grant (formerly qualified child) bonus payment.

Housing

• Stamp duty on the bulk-buying of homes will be hiked to 15pc in a bid to halt vulture funds squeezing out first-time buyers.
• The Government is bringing in a new mansion tax worth 6pc which will be introduced for properties worth over €1.5m. Existing stamp duty of 1pc will continue to apply for properties worth up to and including €1m, while it will be 2pc on properties worth over €1m but less than €1.5m. It kicks in from tonight.
• €7.8bn to go to Department of Housing in this year’s Budget, with a further investment of €3bn to “build more homes and address affordability constraints”. Total capital investment next year will be €15bn for infrastructure. €2bn will be available next year for 10,000 new social homes.
• €1.6bn will continue to support 66,000 social housing tenancies alongside an additional 7,400 social homes next year, as well as 38,000 social housing leases already in place.
• It will also bring 10,000 new households under the Housing Assistance Payment and Rental Accommodation Schemes in 2025.
• Tenants will benefit from an increase in the renter’s tax credit, which will ­increase to €1,000 next year and they will be able to backdate a claim of the same amount for 2024. This will work out at €2,000 for a jointly-assessed couple.
• The Help-to-Buy scheme will be extended to 2029 to assist first-time buyers. The First Home shared equity scheme will also remain in place.
• Mortgage interest relief will be extended for another year.
• There will be an extension of pre-letting expenses for landlords for a further three years.
• €90m will be made available to retrofit social homes for 2025.
• €2.1bn will be used to provide accommodation for those fleeing Russia’s invasion of Ukraine and to support those seeking international protection.

Education

• The free schoolbook measure is set to be extended to Leaving Certificate students. It currently is offered for pupils in junior infants right up to those in junior cycle of secondary school.
• School transport fees reduced during the pandemic will remain in place.
• Extending hot school meals programme to all remaining primary schools in 2025.
• A new fund to pay for mobile phone pouches, which will allow schools lock away devices during classes, is also being established.
• Third-level students will get €1,000 off their college fees, reducing the cost from €3,000 to €2,000, and postgraduate students will see their fee-contribution grant increase from €4,000 to €5,000.
• A €100m package from Higher Education Minister Patrick O’Donovan will see a once-off reduction of apprentice contribution of €1,000.
• There will be funding for more than 1,600 special needs assistants (SNAs) and 768 extra special education teachers in Irish schools.
• Almost €1.5bn over six years, to 2030, for capital investment for further and higher education. Funding will support 6,800 apprentice registrations next year.

Health

• There will be an additional 495 beds across hospital and community services and 600,000 additional home-support hours.
• There will also be funding for two new surgical hubs in Galway and Swords in Dublin. An increase in GP training places is also expected.
• Free hormone replacement therapy (HRT) will also be rolled out for women following extensive campaigning. The measure could save women who are prescribed HRT between €360 and €840 a year, based on women paying between €30 and €70 per month.
• The Free IVF treatment scheme will be expanded in two areas, to include donor-assisted fertility treatment, and also couples experiencing “secondary” fertility problems – where they already have a child but are struggling to conceive again.
• Cervical Check – there will be exemption from income tax, capital gains tax and capital acquisitions tax on payments made to the women impacted by the failures in the CervicalCheck scandal.

Justice and Defence

• Significant funding has been allocated to the Department of Justice this year to expand the prison system and tackle domestic violence.
• Funding has been set aside for a new prison on the Defence Forces’ base at the Curragh in Kildare and 1,100 new places in existing prisons will be introduced over the next five years.
• Justice Minister Helen McEntee also received funding to hire up to 1,000 gardaí. The Department of Defence received funding to hire 400 more personnel.
• Irish Prison Service funding will be up in 2025, with the aim of adding 350 extra staff, while extra funding will be allocated towards facilities and improving rehabilitation of prisoners.

Business and employment

• The amount of money an employer can give employees as bonus payment will increase to €1,500.
• National minimum wage will increase by 80 cent per hour to €13.50 euro from January 1.
• A €4,000 energy grant to cover the cost of electricity paid to the retail and hospitality sector before Christmas.
• Sick-leave days will not increase to seven days in January as planned.
• Auto-enrolment pensions will be delayed until next September.
• Tax changes will allow small businesses keep more of the money they earn, this will include changes to Vat thresholds.
• There will be changes to self-employed earned income to allow them keep more money.
• A new €20m fund will help businesses upskill staff.
• Increase in the first year threshold in the R&D tax credit from €50,000 to €75,000 to provide “further cash-flow support” to companies undertaking smaller R&D projects or engaging with credit for first time.
• The minister will introduce a new relief for expenses incurred in connection with a first listing on an Irish or European stock exchange, subject to cap of €1m

Transport

• Free public transport will be offered to children aged 5 to 8.

Farming

• Over €2bn to the Department of Agriculture next year.
• €13m for new tillage scheme
• €10m for animal health measures
• €22m continuation of sheep welfare scheme
• €8m to enhance payment rates of national beef welfare scheme

Other measures

• €1bn to Irish Water
• €1.25bn to the Land Development Agency
• €3bn for infrastructure spending
• €168m in funding will target the regeneration of towns and villages, as well as to deliver necessary infrastructure in these areas
• The Motor Insurers Insolvency Compensation Fund levy will be reduced from 1pc to 0pc from January 1.
• Barriers for charities that wish to have access to tax benefits under the Charities Donations Tax Scheme will be removed. Charities will no longer have to be established for at least two years to access the scheme.
• Extra €4.1bn for Future Ireland Fund in 2024
• Funding of €380m for arts and culture for next year for a wide variety of sectors.
• €226m will be allocated for tourism in 2025.

Apple tax

• In relation to the €14.1 billion of Apple back taxes, Paschal Donohoe said it was vital to make the best use of the funds in the long term. He said the money would be invested in four “strategic investment pillars” – namely water, electricity, transport and housing.