The 2025 Budget was announced today, Tuesday 1 October, by Minister for Finance, Jack Chambers, and Minister for Public Expenditure and Reform Paschal Donohoe.
As the election approaches, the government has crafted this budget with a clear focus on easing the financial pressures faced by both individuals and businesses. By implementing measures aimed at reducing everyday expenses and providing substantial relief to businesses grappling with rising costs, the budget seeks to enhance economic stability and voter confidence.
Minister Chambers announced a total spending package of €8.3 billion, including core spending and tax increases of €6.9 billion, and taxation measures amounting to €1.4 billion.
In his speech to the Dáil, Minister Chambers said that “Budget 2025 – the fifth and final budget of this Government – reflects a continuation of a sensible and sustainable approach to fiscal policy that has helped to deliver a resilient economy and budget surpluses”.
Key Announcements for businesses operating in Ireland:
• Standard Rate Cut Off Point on income tax: Increased by €2,000 to €44,000.
• Personal, PAYE, and earned income tax credits: Increased by €125 to €2,000.
• Universal Social Charge (USC): Reduced of the 4% rate to 3% and the increasing the entry threshold to the new 3% rate by €1,622 to €27,382.
• Minimum wage: Increased by €0.80 per hour to a new level of €13.50 per hour.
• Small Benefit exemption: Increase of annual employee exemption from €1,000 to €1,500 and will also permit five non-cash benefits to be granted by the employer.
• VAT registration thresholds: Increased to €85,000 and €42,500 respectively.
• Reduced VAT rate for gas and electricity: The 9% rate will be extended for another 6 months to 30 April 2025.
• Employment Investment Incentive: Increase from €500,000 up to €1 million.
• Small Company Start-Up Relief: enhancement of the relief by extending to small owner managed businesses.
• Start-Up Relief for Entrepreneurs: Increase from €700,000 to €980,000.
• R&D Tax Credit: Increase in the first-year payment threshold from €50,000 to €75,000.
• VRT Amendments: BEV commercial vehicles now qualify for the €200 VRT rate. An 8% VRT rate for category B vehicles with CO2 emissions under 120g/km is introduced. The Accelerated Capital Allowances scheme for gas and hydrogen-powered vehicles is extended for another year.
• Vehicle Capital Allowances: From January 1, 2027, the emission threshold for low-emitting company cars will be reduced from 156g/km to 141g/km to incentivize EV uptake and support the second-hand EV market.
• Tax relief for angel investors: Amendment to the Capital Gains Tax Relief targeted at investors in innovative start-ups to provide for an increased lifetime limit on gains to which the relief applies from €3 million to €10 million.
