What Budget 2025 means for you
If you’re wondering how this year’s Budget affects your household finances, we explain what’s changed and what it means for you and your family.
This year’s budget includes €1.6bn in tax cuts, and a €2.2bn cost of living package targeted at low earners and those on welfare. Here’s a summary and explanation of the Government’s main announcements.
Energy costs
Energy prices have continued to add financial pressure to households already struggling with higher food and fuel costs. Electricity credits handed out last winter eased the burden for many and have returned again this year, albeit at a lower amount.
What’s changed?
The Government has announced a further raft of measures to help with high energy bills.
What it means for you
- All households will receive the energy credit. So regardless of the size of your home, you’ll get a total of €250 credited to your electricity account in two instalments. It will be an automatic payment, so you don’t have to do anything.
- If you’re a prepay customer, you should hear from your supplier who’ll let you know credit has been applied to your account and tell you how to redeem it.
- If you qualify for the Fuel Allowance you’ll get a once-off €300 lump sum. Fuel Allowance gets paid automatically if you are a welfare claimant, but those over 66 from 1 January 2025 will need to apply and get means-tested.
- Gas suppliers in Ireland are obliged to add a carbon tax charge to all customers’ bills. The €7.50 per tonne rise, will mean around €17.00 will be added to gas customer bills annually.
Housing costs
Homeowners and renters have been squeezed by rising mortgage rates and rental costs this year so the Government has enhanced and extended measures to help with housing costs.
What’s changed?
What it means for you
- If you’re a homeowner with a mortgage between €80,000 and €500,000 you’ll qualify for 20% tax relief on the extra interest paid on your mortgage between 2022 and 2024. You’ll need to apply for the relief through Revenue’s Online Service.
- If you’re renting your property and are a PAYE taxpayer, the tax credit reduces your tax by €1,000. You can claim the tax credit for rent payments made in previous years by applying to Revenue. Make sure you claim it individually if you live with others or are part of a couple.
Transport costs
Families, carers and relatives of the elderly and young people all benefit from Budget 2025 measures this year.
What’s changed?
What it means for you
- The Carbon Tax rise means that petrol and diesel prices will go up. The change, on 9 October, means that motorists could pay an extra €12 per full tank.
- If you regularly chaperone an elderly relative or friend to hospital appointments or similar, you can travel for free with them.
- The 20% fare discount which means you’ll save €2 on every €10 fare is being extended through 2025, potentially saving commuters hundreds of euros. Students and young adults can continue to enjoy even bigger 50% discounts.
Work & Taxes
With most Irish residents paying some form of tax, the announcements on USC, tax credit increases and income tax cuts will affect almost everyone.
What’s changed?
VAT
The 9% VAT rate will be extended for a further 6 months on gas and electricity.
Minimum wage
The Minimum Wage will increase from €12.70 to €13.50 per hour from 1 January. This means an annual increase of around €1,500 for full-time workers on a minimum wage.
What it means for you
- The reduction in USC, tax credits increase and higher rate threshold change means you’ll keep more earnings at the month’s end. These changes could mean you’re at least €1,000 per year better off.
- You’ll now be able to earn €44,000 before paying the higher 40% tax rate on some of your earnings, so middle income earners will be giving less tax away.
- The Universal Social Charge (USC) has been reduced from 4% to 3%, so if you have an income between €25,760 and €70,044 you’ll keep at least €250 more of your earnings. The entry level to the new 3% USC rate will increase by €1,622 to €27,382 to take into account the national minimum wage increase next year.
- The minimum wage boost would result in an extra €31.20 per week if you work 39 hours weekly. This works out around €134 per month or €1612 per year (before tax).
- If you care for a family member, a child with disabilities or a single person with childcare responsibilities, you will also benefit from a €150 to €300 tax credit increase.
Education
In 2023 the government introduced free school books in primary schools and one-off financial measures to support third-level students alongside grant increases. These measures are set to continue into 2025 and beyond.
What’s changed?
What it means for you
- If your child is in their first three years of secondary school, they will receive free schoolbooks from next September. Other student resources such as copybooks, calculators, dictionaries and other classroom resources will be included in the scheme.
- Wherever you live and whatever primary school they attend, your child will have access to a free hot school meal. The scheme will roll out on a phased basis starting in April 2025.
- You’ll also pay around €1,000 less in fees if you’re headed to college or Uni next year. The student contribution fee has been pegged back again from €3,000 to €2,000, while more students will be able to access support due to household income thresholds rising.
Childcare costs
Around 40% of workers in Ireland have dependent children and childcare costs, with everything else, have risen sharply in recent years. Funding for the National Childcare Scheme will rise by 44% which will reduce full-time childcare costs by up to €1,100.
What’s changed?
What it means for you
- New parents will receive a financial helping hand with the €420 “baby boost” and more money in their pocket thanks to the €15 weekly rise in parental benefits.
- Parents paying nursery fees are only just starting to benefit from the pledged 25% reduction in childcare costs which started in September. The latest cash injection will mean parents will see further reductions in childcare costs - saving on average €1,100 per year.
- The doubling of Child Benefit paid out in November and December is worth €280 per child - a welcome boost for families during the most expensive time of the year.
Benefits
This year the Department of Social Protection is providing a further raft of once-off cost-of-living supports, alongside a €12 rise in weekly social welfare payments such as the state pension, Carer’s Allowance, disability payments and Jobseeker’s Allowance.
What’s changed?
State pension
The State Pension is paid to people from the age of 66 who have paid enough PRSI. From January 2025 it will be €289.30.
From 1 January pensioners will see an increase of €12 per week and be able to claim their pension anytime between the ages of 66 and 70.
All PRSI rates will increase by 0.1% on 1 October 2025.
What it means for you
If you receive social welfare, you’ll get extra cost-of-living support which includes bonus payments, and an increase in weekly benefits.
- If you receive welfare payments, the €12 increase could mean an extra €52 per month, which is €624 per year. If you’re in receipt of one of the Disability Allowances or Carers Support grant, you will receive a lump sum of €400 to help towards the rise in food, fuel and day-to-day living expenses.
- Families also get a boost to support the unprecedented rise in living costs with bonus child benefit payments worth €280 per child. If you receive the working family payment, you’ll get a bonus of €400 and an extra €100 if you have an extra qualifying child.
- If you’re aged over 66 and receiving your pension, you’ll get €12 extra per week and your pension will rise to €289.30.
You can find out more about qualifying benefits and new payment rates from the Department of Social Protection.
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