Budget 2025 was announced today in the midst of a strong economy with effectively full employment but with continuing global uncertainty and its consequences as a backdrop. This sets the scene for supplementary spending.
For individuals, other than increases in direct payments to social welfare recipients as part of a €2.7bn package, in terms of tax and energy credit changes the Minister for Finance proposes that:
•Increases in standard rate bands and tax credits.
•2 energy credits to all households of €125 each are granted towards energy costs which remain elevated.
•One further year of mortgage interest relief for certain mortgage holders is provided.
•Increase in rent tax credit to €1,000.
For businesses, the Minister has announced targeted measures to assist new and developing businesses such as additional tax relief for investments in SMEs. A new participation exemption will apply to dividends received by Irish holding companies. Also, for start-ups, relief from corporation tax will be extended. For companies engaging in R&D, the R&D Tax Credit first year payment threshold will be increased to €75,000 from €50,000.
Although not announced in the Budget, the Minister for Finance has indicated the maximum pension funding threshold will be increased from €2 million to €2.8 million over 4 years commencing in 2026.
In terms of announcements in Budget 2024, the following changes apply in 2024:
•For residential property landlords, tax relief at the 20% rate of income tax applies for 2024 at €3,000 increasing annually to €5,000 in 2026 and 2027.
•From 1st October 2024 employee and self-employed PRSI increased from 4% to 4.1%.
•Business owners will note from 1st October 2024 Employers PRSI increased from 11.05% to 11.15%.
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