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Understand the Income Tax measures of Budget 2025 at a glance.

Today, the Minister for Finance, Jack Chambers T.D., and the Minister for Public Expenditure, NDP Delivery and Reform, Paschal Donohoe T.D., announced the details Budget 2025.

As anticipated, Budget 2025 introduced several tax measures affecting individuals, families and households.

This article will focus on the tax measure introduced by Budget 2025, specifically under the Income Tax or Personal Tax heading.

Standard rate band increased by €2,000

• The income tax standard rate band has been increased by €2,000 for all earners, resulting in the band for single individuals increasing from €42,000 to €44,000

• The band for Single, Widowed or Surviving civil partners, qualifying for the Single Person Child Carer Credit was raised from €46,000 to €48,000,

• The band for married couples/civil partners with one earner will be increased from €51,000 to €53,000 for the 2025 tax year onwards.

Increase in Tax Credits

• The Personal Tax Credit, Employee Tax Credit and Earned Income Credit will all be increased from €1,875 to €2,000.

• The Home Carer Tax Credit has increased from €1,800 to €1,950.

• The incapacitated child tax credit has been increased by €300 from €3,500 to €3,800.

• The Single Person Child Carer Tax Credit will be increased from €1,750 to €1,900.

• The Blind Tax Credit will be increased from €1,650 to €1,950.

• The Dependant Relative Tax Credit will rise from €245 to €305.

• The Rent Tax Credit has been increased for the tax years 2024 and 2025. It will be €1,000 per year for individuals and €2,000 per annum for a jointly assessed couple (married or civil partners).

• The Sea-going Naval Personnel Tax Credit has been extended for five years to 31^st December 2029.

Other Personal Tax Reliefs

• Mortgage Interest Relief has been extended. There has been no change to the qualifying criteria.  Homeowners must have an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 as of 31st December 2022. Qualifying homeowners will be eligible for this tax relief in respect of the increased interest paid on their mortgage in 2024 as compared with 2022. Tax Relief is at the standard Income Tax rate of 20%.  The Tax Credit is capped at €1,250 per property.  To claim Mortgage Interest Relief, the taxpayer must file a Tax Return and the taxpayer must be compliant with Local Property Tax (LPT) requirements.

• The Help to Buy Scheme has been extended for a further four years at the current rates until the end of 2029.

• Pre-Letting Expenses Relief. The current tax relief, capped at €10,000 per premises, for certain pre-letting expenditure will be extended for a further three years to 31^st December 2027.  Section 97A TCA ‘97, which deals with rental expenses, provides that certain expenses incurred on a vacant residential property before its first letting following a period of non-occupancy are allowable as a deduction against rental income from that specific premises.

• Various farming related Tax Reliefs have been extended until 31^st December 2027 including (a) Enhanced Stock Relief for Registered Farm Partnerships, (b) Stock Relief for Young Trained Farmers as well as (c) General Stock Relief.

• Budget 2025 introduced a BIK exemption for home car chargers provided by employers. It provides for an exemption from Benefit-in-Kind where it is the employer who incurs the cost of providing a facility for electric charging of vehicles at the home of an employee or director.

• The proposed tapering of Benefit-in-Kind Relief for electric vehicles has been deferred. The universal relief of €10,000 which applied to the Original Market Value of a vehicle in Category A – D is being extended to 31^st December 2025.  The amendment to the lower limit of the highest mileage band has also been extended until 31^st December 2025.   Therefore, the highest mileage band is entered into at 48,001km.

Small benefit exemption

• There will be an increase in the annual limit of the small benefit exemption from €1,000 to €1,500.

• It has also been amended to allow five non-cash benefits, up from two, to be granted by an employer in a single year. The cumulative total of the first five benefits in a calendar year cannot exceed €1,500.

• From 1^st January 2024 an employer is required to return details of all qualifying incentives provided to employees where the small benefit exemption applies.

• This benefit can be given to any employee of the company, including directors and shareholders, providing they are on the payroll.

Universal Social Charge

Various amendments to the USC system were introduced in Budget 2025.

• The 4% rate of USC will be reduced to 3%.

• The 2% USC rate band will increase by €1,622, from €25,760 to €27,382.

From 1^st January 2025, the USC Rates and Bands will be:

• €0 – €12,012 – 0.5%

• €12,013 – €27,382 – 2%

• €27,383 – €70,044 – 3%

• Balance – 8%

Self-employed income over €100,000 will be liable to a 3% surcharge i.e. 11%

PRSI

• All classes of PRSI will increase by 0.1% percentage point from 1^st October 2024.

• From 1^st October 2024 the minimum annual PRSI contribution is €650.

• There will be a further 0.1 percentage point in October 2025. From 1^st October 2025, (i) the employee PRSI rate will increase from 4.1% to 4.2%, (ii) the employer PRSI rate will increase from 11.15% to 11.25% and (iii) the rate will rise from 8.9% to 9% in situations where the weekly income is €496 or less.

• From 1st October 2025, the self employed PRSI rate will increase from 4.1% to 4.2%.

For full information on Budget 2025, please click https://www.gov.ie/en/publication/e8315-budget-2025/

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

The Income Tax Return filing deadline is 31st October 2024.

That deadline date is extended to 14^th November 2024 provided you file both (a) your Income Tax Return and (b) your Income Tax Balance due for 2023 plus your 2024 Preliminary Tax.

When preparing your 2023 Income Tax Return, here are some Tax Reliefs you may not have considered before:

Childminders Tax Relief Scheme

You could be entitled to the Childminder’s Tax Relief if:

• You mind three or fewer children in your own home at any one time and

• You earn no more than €15,000 per annum.

• You must have informed the HSE that you will be providing such services in your own home.

• You must be registered as self employed and registered under self assessment.

No tax will be payable on the childminding earnings received, provided the amount is not more than €15,000 per annum.

As you cannot deduct any expenses, there is no requirement to maintain and keep detailed accounts.

If another person provides childcare services with you in your home, the €15,000 income limit is divided between you.

Despite the fact that you may have no Income Tax liability, you are obliged to file a Form 11 Tax Return by 31^st October 2024 or 14^th November 2024, whichever is relevant to you.

If, however, the childminding income exceeds the €15,000 annual threshold, the total amount will be taxed as normal under the self-assessment rules.

For further details, please click: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-07/07-01-29.pdf

Irish rent tax credit

The Rent Tax Credit was introduced in Budget 2023 which is available for the tax years 2022 to 2025 inclusive.

In Budget 2024, the Rent Tax Credit was increased by €250.

When completing your 2023 Form 11 Tax Return the rent tax credit is worth a maximum of €500 per year from 2023 for a single individual and €1,000 for a married couple.

The rent tax credit is calculated as 20% of the rent paid in the year and is capped at €500 for a single person or €1,000 for a couple who are jointly assessed to tax.

When calculating your 2024 Preliminary Tax liability, the rent tax credit increases to €750 for a single individual and €1,500 for a married couple.

Please be aware that the claim must relate to rental payments which both (a) fell due and (b) were actually paid during the tax year of assessment.

This tax credit will only be available to taxpayers who are not in receipt of any other housing supports.

For further details, please click: https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-credit/index.aspx

Training Course Fees

Relief is available for fees between €317 and €1,270 paid in respect of Information Technology and Foreign Language courses which are on Revenue’s list of approved Courses.

To check the eligibility of your course, please click the following links:

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/documents/education/s476-approved-languages-2009-10.pdf

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/documents/education/s476-approved-it-courses-2014.pdf

These courses must be at least two years in duration and must not be a postgraduate course. Instead postgraduate courses in foreign languages or information technology may qualify for tuition fees relief.  For further details, please click the following link: https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/education/tuition-fees-paid-for-third-level-education/index.aspx

This relief applies to fees if you are the student or if you have paid fees on behalf of another person.

For complete information, please click: https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/education/foreign-language-and-it-courses/index.aspx

To get your tax return filed before the income tax deadline, please contact us on queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.