As the announcement of Budget 2025 approaches, the Irish government is preparing a comprehensive package aimed at addressing various economic and social challenges. Scheduled for release on October 1st, the budget is expected to include significant measures to support cost-of-living, reduce taxes, and enhance social welfare.
Cost-of-Living Supports
One of the key components of Budget 2025 is a substantial cost-of-living package worth approximately €1.5 billion. This package is designed to provide relief to households struggling with rising living costs. It includes lump-sum payments to welfare recipients and new energy credits, although these will be less generous than the previous year’s payments. Despite the ongoing need for such supports, some economic think tanks argue that the current economic conditions may not justify these measures.
Tax Reductions
A significant highlight of the budget is the introduction of a major income tax and Universal Social Charge (USC) reduction package, amounting to €1.4 billion. The government aims to ensure that no individual earning the average wage will be subject to the higher rate of income tax. This will be achieved through adjustments to the tax bands and an increase in the tax credit. These changes are expected to provide substantial relief to middle-income earners and stimulate economic activity.
Social Welfare Enhancements
Social welfare recipients are set to benefit from a range of enhancements. The budget includes a €12 increase in weekly payments for pensioners, carers, and people with disabilities. Additionally, there will be two social welfare bonus payments before the end of the year, providing further financial support to vulnerable groups. The government is also focusing on addressing child poverty, with measures aimed at supporting children in need. However, a two-tier child benefit system has been ruled out, ensuring that all children receive equal support.
Energy Credits
Households can look forward to another round of energy credits, although these will be less than the three payments of €150 provided last year. The government is considering phasing out these subsidies as the worst of the energy crisis has passed. This move reflects a shift towards more sustainable and long-term solutions for energy affordability.
Inheritance Tax and Rent Tax Credit
In response to rising property prices, the inheritance tax threshold is expected to increase from €335,000 to €400,000. This adjustment aims to alleviate the financial burden on families inheriting property. Additionally, the rent tax credit, which was increased to €750 last year, is likely to rise to €1,000. This measure is intended to provide relief to renters facing high housing costs.
Minimum Wage
The Low Wage Commission has recommended an increase in the minimum wage to €13.70 per hour. While the government is expected to follow this recommendation, it is not yet guaranteed. If implemented, this increase will benefit low-income workers and help address income inequality.
Public Spending and Infrastructure
Budget 2025 will include a spending package of €6.9 billion, focusing on public services and infrastructure. This includes pre-committed spending from previous budgets and new policies to be announced. The government aims to invest in critical areas such as healthcare, education, and transportation, ensuring that public services are adequately funded and improved.
