Budget Day! What does that mean anyway?!
It’s the day that the government announces how it plans to raise money for the following year – and how it’s going to spend that. So it covers the full remit of Government spending and financing. But as a PAYE tax specialist we are most interested in those measures that impact your wages – being Income Tax, USC and PRSI changes.
Income Tax
Rates of Income Tax remain unchanged, with the Standard Rate being 20% and the Higher Rate (also called the Marginal rate) staying at 40%.
The Standard Rate Tax Band, which is the point at which you start paying 40%, increases by €2,000. For a single person that’s from €42,000 to €44,000 and will save you €400 a year if you earn above that level.
The main Tax Credit changes that we think will affect most tax payers are:
- The Employee and Personal Tax Credits are both increasing from €1,875 to €2,000 in 2025. This will save single people €250 and married couples up to €500.
- The Rent Tax Credit is increasing from €750 to €1,000, with that increase backdated to 2024!
- The Mortgage Interest Tax Credit is remaining in place for another year, which could save you up to €1,250 if you have seen big increases in your mortgage payments in recent years.
- The Home Carer’s Tax Credit increases from €1,700 to 1,950
- The Single Person Child Carer Credit increases from €1,750 in 2024 to €1.900 in 2025
- The Incapacitated Child Tax Credit increases from €3,500 in 2024 to €3,800 in 2025
- The Blind Person’s Tax Credit increases from €1,650 to €1,950
- The Dependent Relative Tax Credit increases from €245 to €305
USC
USC, has more tax bands and tax rates than Income Tax! But the main changes are:
- The rate at which you pay 2% increases from €25,750 to €27,382 saving anyone earning over that amount €32.
- But the bigger change is in the next wages bracket: incomes above €25,750 previously were taxed at 4%, but this is being reduced to just 3%.
- The above changes together will save a taxpayer up to €460
PRSI
PRSI is increasing by 0.1% from This October and will increase by another 0.1% next October.
So for example, if you are paid €1,000 a month, you will pay an additional €1 in PRSI.
On an Annual basis, the PRSI changes means that someone earning €50,000 per annum will pay an additional €50 in PRSI
Main Non Tax Changes
Some non tax changes that could have implications for your taxes are as follows:
- The standard hourly Minimum Wage will increase by 80 Cents from €12.70 to €13.50 from January
- Most taxable welfare payments are earmarked to increase by €12 per week, including the State Pension and Jobseekers.
If you are interested in viewing the full range of tax measures and the impact on these for example taxpayers, the Dept of Finance have excellent detail here.