Minister for Finance Jack Chambers delivered his first budget speech to Dáil Éireann on Tuesday afternoon as part of Budget 2025. Read his address in full below.
A Cheann Comhairle, is onóir é Buiséad 2025 a thíolacadh, é seo Buiséad deireanach théarma an Rialtais seo, don Teach seo inniu in éineacht le mo chomhghleacaí an tAire Donohoe.
Ceann Comhairle, when this Government took office in June 2020, we were still dealing with Brexit, and in the midst of a global pandemic that was having an unprecedented impact on our society and economy. The effect on families, businesses, our way of living was devastating. While only emerging from that pandemic, we were then confronted with the war in Ukraine, and the cost of living pressures.
This Government, through successive budgets, has supported the individuals, families and businesses who have played an integral part in ensuring our economy is in such a strong position today. Government responded as it should have, with a unity of purpose, and provided extraordinary supports to deal with all the challenges we faced. The outcomes and the progress made were not inevitable. It is as a result of the drive and focus of this Government to provide a better future for everyone and in the careful management of our public finances. I believe Budget 2025 puts in place the policies and measures to continue this positive trajectory and ensure that all our people see a promising and hopeful future in this country.
Budget 2025 main points: Energy credits, bonus welfare payments, higher minimum wage and tax changes
Budget 2025 calculator: How this year’s budget will affect your income
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Today’s budget is my first and it is also unique in the opportunity it presents to plan, transform and deliver for the future. And that future is not just about next month, next year or the next decade, it is about ensuring that the children born today in Ireland and every day from here on can live prosperous and fulfilled lives.
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They will enjoy better healthcare, live longer, have better education, more housing and significant infrastructure improvements as a result of the decisions made today. But we also need to give hope to young people now and to their families, their parents and grandparents whether living here in Ireland or abroad that the decisions being made today will help them afford a home of their own and live a life here in Ireland achieving their full potential. Budget 2025 puts the country on a firm footing for the future.
Progressivity, fairness and catalysing real opportunity for the future have been at the core of this government’s budgets and these principles have been central to how Budget 2025 has been designed. Strengthening communities, building prosperity, tackling the cost of living challenges and enhancing living standards are all key components to build a better State that can make a real difference for the people of Ireland. We want our country to be an attractive place to live in, work in, raise a family and create jobs and opportunity – a foundation of real progress for the future.
Infrastructure and investment
Our ability to deliver for current and future generations is dependent on careful and prudent management of the State’s resources. The recent judgment from the Court of Justice of the European Union has provided the State with one-off revenue that has the capacity to be transformational. We know that the future economic performance of the State will depend on how the public infrastructure programme is prioritised and delivered over the next decade. It is imperative that this revenue is not used for day-to-day expenditure or to narrow the tax base. There should be a clear strategic direction in how it can be used to deliver for the future of our country, improving the lives of people and communities and supporting our small and medium enterprises and multinational corporations.
Today, I will outline a framework that will set out principles and directions on how this revenue should be allocated in a manner that will maximise its return. It is this government’s view that we should utilise these revenues to address the known challenges that we face in housing, energy, water and transport infrastructure. Our economic, enterprise and industrial model is central to future progress. It has transformed our country from where we were 100 years ago. We must protect it. We must nurture it. We must continue to advance this model as a catalyst to support the transformation of our country, ensuring opportunities for the future. We will invest in a future that ensures Ireland is a country and a society that is fair, equitable and a beacon of hope, prosperity and progress.
We are in a global environment where competition for attracting foreign investment is intensifying. Infrastructure is a fundamental component of Ireland’s competitiveness, and is vital to businesses, large and small, and to attracting new foreign investment into the State. Maintaining our competitiveness and having the means to improve it is vital to maintaining employment in all sectors of our economy, no matter where those jobs are located.
The framework for allocation of the windfall receipts should be based on a number of high level principles and parameters, but the guiding principle must be to benefit all citizens by supporting our future economic development.
The development of the framework will help ensure the maximum rate of return, both from an economic and societal perspective, from this once-off resource which can further complement the National Development Plan.
The Departments of Finance and Public Expenditure, NDP Delivery and Reform, will build out this framework, with input from other relevant departments and agencies. This will focus on the expected considerations for public investment in key infrastructure, including:
- deliverability
- value for money
- additionality
- prioritisation for economic impact
That work will begin now, with the target to bring the framework to Government for approval in the first quarter of next year.
Ceann Comhairle, the recent disposal of part of the State’s shareholding in AIB, has presented us with an immediate opportunity to allocate additional funding towards capital spending over the coming years.
To this end, today, I am making available, €3 billion for infrastructure spending.
This will help build on current progress, eliminating key infrastructural bottlenecks more rapidly, and help lay the foundations for further improvements in living standards and competitiveness.
Deciding on the use of these resources requires prioritisation and it is important that their use results in tangible outputs.
I recognise that there are substantial needs in housing, but also in water and energy infrastructure that need to be addressed. Investment in these three areas will allow us to meet the current and future needs of our country.
To that end, I intend that these resources will be ring fenced and drawn down when the funding is required and the necessary arrangements are in place to use it.
Water infrastructure
In terms of addressing water infrastructure, €1 billion will be provided to Irish Water for non-domestic capital investment. This will allow for works to be carried out across the country on capital projects related to remedial action lists, connections for new housing and addressing urban wastewater pressures.
Housing
This Government has invested unprecedented levels into housing delivery and it is our priority to continue to accelerate the supply of new homes. To support this, a further allocation of €1.25 billion will be made available to the Land Development Agency (LDA). This will bring the total amount of funding now available to the Agency to €6.25 billion to deliver thousands of more affordable homes.
The LDA will be tasked with deploying this capital in a way that can continue to drive the delivery of social and affordable homes.
Electricity grid infrastructure
Confidence in our ability to provide a secure, stable, and green energy infrastructure is important to position Ireland for future economic development and investment.
To address this, I am also providing €750 million to facilitate an initial, direct equity injection to support capital spending on the further development of our electricity grid infrastructure.
The upgrading of this key element of our national infrastructure will be instrumental in ensuring our economy is ready for the next phase of its development. Providing a secure, sustainable source of energy, will encourage further industrial investment, facilitate the progression of the digital economy, enable decarbonisation and enhance our competitiveness.
The upgrading of the national electricity grid will require capital investment in both the on and offshore grid.
I believe the signalling of the provision of this funding to expand the capacity of our electricity grid, will have a positive impact on future investment decisions currently being considered by both indigenous and multinational companies.
In the event of further AIB share sales, I will seek to provide further funding to these critical infrastructure areas of water, housing and the electricity grid to underpin our future economic development.
With this level of investment in infrastructure in the future, it is important to reflect on where we have come from. In the century since independence, Ireland has grown more tolerant, more diverse, more prosperous, more equal and more influential around the world. We need to keep building prosperity for the future. The measure of our success is how we treat people, how we turn the tide of our economic success into a force that lifts everyone, especially those who need our help the most. We can appreciate our achievement as a country more because of the generations at home who have had to struggle for it. But we should not forget the people who struggle still. It our responsibility to help because we can and we will.
Macroeconomic outlook
Ceann Comhairle, I will now provide an update on the macroeconomic outlook. I am pleased to report that our economy, on aggregate, is in relatively good shape. Over the past year or so, inflationary pressures have eased considerably, our domestic economy has grown at a robust pace and we continue to experience record high levels of employment.
Indeed, our economy has now been operating close to, if not at, full employment since the end of the pandemic. Almost three quarters of our working-age population are now in employment – with participation amongst female workers at its highest level ever. A truly remarkable achievement and one we should be proud to recognise.
The rate of inflation, which was close to 10 per cent just two years ago, has eased significantly this year. Indeed, inflation has been at or below 2 per cent since March. This easing comes as welcome relief to households throughout the country who have dealt with everyday financial struggles due to rising prices over the past two years.
Even as the headline rate of inflation has declined I am acutely aware that many are still struggling as price levels throughout the economy remain elevated. That is why Budget 2025 includes a cost of living package, designed to support the most vulnerable and ease the financial burden over the winter months.
Ceann Comhairle, it is clear that supply is the main constraint on growth at present and that is why it is imperative that we continue to narrow the infrastructure gap and improve the productive capacity of the economy. Indeed, Government recognises the need to invest in our future and support our competitiveness in the years to come. As part of Budget 2025 we are investing at scale to address these bottlenecks and put in place long-term solutions to ensure a more sustainable, productive and resilient economy.
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Budget 2025 is taking place against a backdrop of escalating international conflict and geopolitical instability. Our experience over the last number of years has shown that we are now clearly living in a more shock prone world. As a small, open and highly globalised economy, a deterioration in the international economy would, of course, have immediate knock on consequences for the Irish economy.
While we cannot prevent external shocks, we can ensure that we are on the best possible footing to respond when they do occur. Within this context, Budget 2025 has been designed to strike the right balance between ensuring families, workers and businesses have the supports they need today while also investing in our public services and infrastructure to prepare us for the challenges into the future.
While external risks remain elevated, the short term prospects for the domestic economy are encouraging. The period of elevated price pressures has passed and inflation has now returned to a more stable trajectory. This easing in inflation, which is projected to remain below 2 per cent both this year and next, will allow for an improvement in real wages and help support growth in consumer spending.
Overall, my department is projecting modified domestic demand (MDD), a proxy for the domestic economy, to grow by 2.5 per cent this year and by close to 3 per cent next year.
The strong growth in the domestic economy is expected to continue to pay dividends in the labour market. Indeed, the level of employment is set to increase by almost 110,000 in the two-year period to end-2025 and the unemployment rate is projected to remain low at around 4½ per cent.
My department’s macroeconomic forecasts have been endorsed by the Irish Fiscal Advisory Council.
Fiscal outlook
Ceann Comhairle, as outlined above, the Irish economy is very strong on a headline level. However, there are real vulnerabilities in our public finances and these must be kept in mind when constructing a budgetary package. We know that our public finances are heavily reliant on corporation tax, much of which is ‘windfall’ in nature and not linked to our domestic economy. And much of our income tax receipts are linked with this highly concentrated revenue stream. As I have said many times before, we must not use these potentially transient receipts to fund permanent expenditure measures.
At this stage, we are all familiar with the structural challenges that we have already started to face. An ageing population, the climate and digital transitions and deglobalisation. We know that we are facing substantial costs on all of these fronts, not to mind, the unknown challenges ahead. We must ensure that the budgetary decisions we make today, continue to place us in a better position to deal with these issues.
This year, my department forecasts tax revenue to amount to €105.7 billion, an increase of €13.6 billion on our Spring forecast, mostly attributable to corporation tax receipts and the revenue from the Court of Justice of the European Union judgment.
Following the enactment of the Future Ireland Fund and Infrastructure, Climate and Nature Fund Act earlier this year, on July 30th I signed the commencement order to officially establish both Funds. They are a critical part of ensuring that future generations are not left to deal with the known challenges facing us. They allow us, at a time when we are recording headline surpluses, to plan for the future while still being in a position to react and provide for those who most need our assistance, to continue to invest in improving public infrastructure, good public services and to continue to support our businesses.
Ceann Comhairle, €4.3 billion was transferred into the Future Ireland Fund and €2 billion into the Infrastructure, Climate and Nature Fund in September. A further €4.1 billion will be transferred to the Future Ireland Fund this year. Transfers to both funds next year totalling approximately €6 billion, will mean by the end of next year, more than €16 billion will have been transferred to the funds.
I can inform the House that we are projecting a General Government surplus of €23.7 billion, or 7.5 per cent of national income this year, and €9.7 billion or 2.9 per cent next year. When ‘windfall taxes’ and the one-off revenue from the Court of Justice of the European Union judgment are excluded, an underlying General Government deficit of €6.3 billion is projected for 2024 and an underlying General Government deficit of €5.7 billion is projected for 2025.
Our debt ratio is moving in the right direction. When this Government took office in 2020 our General Government debt stood at close to 110 per cent of national income. My department projects that this ratio will be 69 per cent of national income this year and will decline to 56 per cent of national income by the end of the decade.
Budgetary strategy
The Government decided in the Summer Economic Statement to provide a budgetary package of €8.3 billion for Budget 2025, which is consistent with expenditure growth of 6.9 per cent and will accommodate higher capital spending and provide for additional public services against the backdrop of a higher population.
Budget 2025 consists of a net tax package of €1.4 billion and an expenditure package of €6.9 billion. I am also announcing today, a cost of living package of €2.2 billion, which brings the total package for Budget 2025 to €10.5 billion.
Budget 2024 measures
Income tax
As I have previously stated, the focus of the personal income tax package in this budget is to support low and middle income earners, by building on the progress already made during this government’s term, specifically in relation to increases to tax credits and USC reductions.
Therefore, today I am announcing a personal income tax package of €1.6 billion.
- I am increasing the main tax credits, the Personal, Employee and Earned Income Credits, by €125
- I am increasing the Standard Rate Cut Off Point by €2,000 to €44,000, with proportionate increases for married couples and civil partners
- turning to the USC, I am reducing the 4.0 per cent rate to 3 per cent. This represents the second consecutive reduction to this rate
Following Government approval this morning, as of 1 January 2025, the national minimum wage will increase by €0.80 per hour to €13.50 per hour. Accordingly, to continue to ensure that these valued workers remain outside the higher rates of USC, I will be further increasing the entry threshold to the new 3 per cent rate by €1,622 to €27,382, in line with the increase to the national minimum wage. This means that a full time worker on the minimum wage will see an increase in their net take-home pay of approximately €1,424 on an annual basis.
As a result of the cumulative increases to the main tax credits, a single person earning €20,000 or less in 2025 will now be outside of the income tax net.
Carers play a fundamental role in our society, and Government is committed to supporting individuals and families with caring responsibilities. It is also a priority to further contribute to the whole of Government approach to tackling child poverty.
Therefore, I am increasing:
- the Home Carer Tax Credit by €150
- the Single Person Child Carer Credit by €150
- the Incapacitated Child Tax Credit by €300
- the Dependent Relative Tax Credit by €60
Separately, the Blind Tax Credit will be increased by €300, which is the first increase to this credit in many years.
The income tax and USC enhancements I have announced today will provide a real benefit to taxpayers across all income levels. Of course, the various cost of living measures that will shortly be announced by Minister Donohoe will provide further benefits.
One of key objectives for this Government was to ensure that workers did not find themselves in a position where they pay more income tax solely because of wage growth as their incomes rise. Taking account of the cumulative personal income tax changes, over the lifetime of this Government:
- the main tax credits have now been increased by 21 per cent or €350 each from €1,650 to €2,000
- the Standard Rate Cut Off Point for single person has been increased by 25 per cent or €8,700 from €35,300 to €44,000, with commensurate increases for persons who are married or in a civil partnership
- the USC middle rate has now been reduced by 1.5 percentage points from 4.5 per cent to 3.0 per cent
- the 2 per cent USC ceiling band has now been increased by 34 per cent or €6,898 from €20,484 to €27,382
Capital Acquisitions Tax (CAT)
The Capital Acquisition Thresholds which apply to gifts and inheritances were last increased in 2019 and I now intend to provide further increases to all thresholds. I believe this is appropriate given the increases in property values in the intervening period. I am increasing the Group A threshold from €335,000 to €400,000, the Group B threshold from €32,500 to €40,000 and the Group C threshold from €16,250 to €20,000.
Small Benefit Exemption
The Small Benefit Exemption allows an employer to provide limited non-cash benefits or rewards to their workers without the payment of income tax, PRSI and USC.
I am increasing the annual limit provided for in the exemption from €1,000 to €1,500 and will also permit five non-cash benefits to be granted by an employer in a single year under this exemption. This change will allow greater flexibility to employers in giving non-tax rewards to their employees. This means that workers may receive up to three additional tax-free rewards or gifts, for instance to reward exceptional performance, or mark significant life events.
CervicalCheck payments
I am introducing an exemption from Income Tax, Capital Gains Tax and Capital Acquisitions Tax on payments made to the women impacted by the failures in the CervicalCheck national screening programme.
Future and historic income or gains arising to these women from the investment of CervicalCheck payments will also be exempt from the relevant taxes.
These exemptions are a further element of the State’s response to the failures of the CervicalCheck Screening programme.
Extension of Sea-going Naval Personnel Tax Credit
The Naval Service plays a critical role in safeguarding our nation’s security. To complement the wider suite of recruitment and retention initiatives under way, and to acknowledge the exceptional hardships borne by our naval personnel at sea, I am extending the Sea-going Naval Personnel Tax Credit for five years, to the end of 2029.
Benefit-in-Kind – Motor vehicles
In relation to the Benefit-in-Kind (BIK) regime for company cars, I am extending for a further year the temporary universal relief of €10,000 to the Original Market Value (OMV) which was first introduced in 2023.
For an employee with an electric company vehicle, they will have an overall BIK relief of €45,000 in 2025 which comprises of the €35,000 electric vehicle specific relief (already in legislation) plus the additional temporary universal relief of €10,000. I am also providing for a BIK exemption for the provision of electric vehicle chargers at the home of a director or employee.
Rent Tax Credit
In budget 2023, this Government introduced the rent tax credit which has played a valuable role in providing financial support to renters right across the country.
Today, I am increasing the value of the rent tax credit by €250, bringing it to €1,000 and €2,000 for a jointly assessed couple for 2025.
In addition, in recognition of the cost of living pressures facing many renters right now, I am also increasing the credit for 2024 to €1,000 and €2,000 for a jointly assessed couple.
Extension of the Help to Buy scheme
Ensuring people have access to home ownership is a key priority for this Government. Since its introduction, the Help to Buy scheme has supported just over 50,000 almost individuals or couples buy their own home. To give further certainty to future homebuyers and to the market, I am extending the scheme until the end of 2029.
Pre-letting expenses extension
To continue to help owners of vacant property to bring that accommodation into the rental system increasing the overall supply of rental accommodation, I am extending the relief for pre-letting expenses for landlords. This means that the relief will continue for a further three years, to the end of 2027, in support of Housing for All.
Reduced VAT rate of 9 per cent for gas and electricity
To continue supporting households and businesses, as part of the government’s cost of living package, I am proposing to extend the 9 per cent reduced VAT rate for gas and electricity for another 6 months to 30 April 2025.
I will introduce a Financial Resolution on this matter later this evening.
Mortgage Interest Relief
Mortgage Interest Tax Relief was announced in last year’s budget, and provided relief for mortgage holders who experienced increased interest rates in 2023 over 2022. In light of the impact high interest rates continue to have on households, I am extending this relief for one further year. This extension means that the relief will also be made available to assist mortgage holders in respect of the increase in interest paid in 2024 over 2022.
Measures to support businesses
Businesses, both large and small, are the lifeblood of our economy, and this Government is committed to supporting businesses so they can continue to grow, innovate, and create employment.
Reducing complexity and boosting Ireland’s attractiveness
International developments and commitments have seen significant complexity added to the corporation tax code in recent years, and in Budget 2025, I am pleased to take an important step towards reducing this burden, through the introduction of a participation exemption for foreign dividends. This measure, which will come into effect from 1st January next, will provide an alternative, much simplified mechanism for double tax relief for multinational businesses. Work will continue in the coming year on participation exemptions, including further consideration of geographic scope and of a foreign branch exemption.
It is critical that we continue to actively work on maintaining Ireland’s attractiveness to businesses. The review of the tax treatment of interest – in respect of which a public consultation was launched last Friday – will seek to further reduce complexity in our tax code.
We must also support innovative businesses as they evolve to meet the challenges, and seize the opportunities, of an increasingly digitalised world. This will be a focus of my department’s review of the Research & Development tax credit, which will be undertaken over the coming year.
In the interim, to demonstrate this government’s continuing commitment to innovative enterprises, I am providing for an increase in the first year payment threshold in the R&D tax credit, from €50,000 to €75,000, to provide further cash-flow support to those companies undertaking smaller R&D projects or engaging with the credit for the first time.
Supporting Small and Medium Enterprises
Start-up and scaling businesses are the backbone of this country, providing significant employment across the country, with the potential to become the market leaders of tomorrow. It has been a long-standing commitment of this Government to support and promote these businesses, including by helping them to attract funding through incentives such as the Employment Investment Incentive, the Start-Up Relief for Entrepreneurs and the Start-Up Capital Incentive.
My department has recently completed a review of these schemes, which I have published today, and I am pleased to announce that I am extending all three schemes, for a further two years, to the end of 2026. I am also doubling the amount an investor can claim relief on under the Employment Investment Incentive from €500,000 up to €1 million, and increasing the relief available under the Start-Up Relief for Entrepreneurs from €700,000 to €980,000.
Linked to this, and in recognition of the government’s commitment to cultivating a thriving business angel investment ecosystem in Ireland, I am amending 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. This relief, which was announced last year, will commence shortly.
In addition, to support new start-up companies, I am enhancing the section 486C small company start-up relief from corporation tax by introducing a new method for companies to qualify for the relief by reference to Class S PRSI, thereby extending the scope of the relief to small owner-managed start-up companies.
For businesses scaling-up, I am introducing a new relief for expenses incurred in connection with a first listing on an Irish or European Stock Exchange, subject to a cap of €1 million. To further support Irish business to grow and scale, in the coming year my department will, subject to State Aid considerations, introduce a Stamp Duty exemption. This measure would enable Irish SMEs to access equity via financial trading platforms designed to support their funding needs.
VAT registration threshold
As a further measure to support small business, I have decided to raise the VAT registration thresholds that apply for the supply of goods and services, which are currently €80,000 and €40,000 respectively, to €85,000 and €42,500 respectively.
Retirement relief
Retirement Relief supports the intergenerational transfer of businesses and farms and works to ensure their smooth transition so that they continue to play their important role in the Irish economy. Two changes will come into effect from 1 January 2025. I will retain the extension of the upper age limit for the relief from 65 until the age of 70 to reflect current work practices. I am also providing that, where there are disposals by the child or children above €10 million within 12 years of receiving the assets, a clawback of the relief will apply. Therefore, where the child or children retains the assets for more than 12 years, the CGT will be fully abated. This will support the growth and scaling of the family owned businesses that are so important in our communities.
Section 481 relief
Turning now to the audiovisual sector, it is a source of great pride for Ireland that we have an international reputation as a centre of excellence for screen production, with a vibrant creative culture. This Government has shown significant ambition in recent budgets in supporting the sector to capitalise on its recent successes.
In order to maintain momentum and expand the breadth of the Irish industry, I am today announcing the introduction of a new Tax credit for Unscripted Production, subject to European Commission approval. The credit will be available at a rate of 20 per cent on qualifying expenditure of up to €15 million and, similar to the other audiovisual reliefs, projects will be required to pass a cultural test.
In addition, in response to specific challenges being faced by smaller feature film projects in bringing their stories to the screen, I am introducing a new 8 per cent uplift, under the section 481 film tax credit, again subject to State aid approval. This will apply to feature film productions with a maximum qualifying expenditure of €20 million. Further details of these two new supports will be set out in the Finance Bill next week.
I am also conscious of the importance of the visual effects (VFX) sector within our wider audiovisual offering in Ireland. I have instructed my officials to monitor trends in the sector internationally over the coming year with a view to providing options to introduce a sector specific measure as part of Budget 2026, if appropriate.
Finally, recognising the important role that share-based remuneration plays in rewarding and retaining employees, which in turn helps businesses to thrive and grow, my department commissioned an independent review of share-based remuneration this year. The report arising from that review has been published today, and contains a number of recommendations, which I will consider in due course.
Farming
Agriculture and the agri-food sector is of vital importance in our economy. This sector is embedded in our communities and wider society. Irish farmers play an important role in providing high quality food domestically and for export and are highly regarded for quality produce and farming methods.
Extension of agricultural stock reliefs
A number of important agricultural tax reliefs are due to expire at the end of this year. I confirm the extension of the following reliefs to the end of 2027; General Stock Relief, Stock Relief for Young Trained Farmers and Stock Relief for Registered Farm Partnerships. I am also broadening the scope of accelerated capital allowances for farm safety equipment by adding further qualifying farm safety equipment types that can benefit from the relief.
Income stability (farming/dairy)
I am aware that there can be income instability in the farming sector in general, and the dairy sector more specifically. I am keen to advance an income volatility measure to support the farming sector for consideration in advance of next year’s budget. This requires detailed consideration of complex issues of policy around how this would operate in the context of financial regulation, governance and legal structures. My officials will work with the Department of Agriculture, Food and the Marine in progressing proposals for consideration.
Agricultural Stamp Duty reliefs
How farmers organise their farm business has been changing in recent years and to reflect modern developments in the agriculture sector I am amending both the Young Trained Farmer Stamp Duty Relief and the Stamp Duty relief which applies to farmers who lease land. The relief for Young Trained Farmers will be revised so that it will be available where it is claimed by an individual farmer who carries on the farm business through a company. The leasing relief will be amended to also encompass farmers who have chosen to incorporate their business.
Agricultural Relief
Agricultural Relief promotes the transfer of farms from one generation to the next and is an important measure to allow our young people to pursue their lives on the family farm.
In recent years, agricultural land has increased in value above inflation and it is difficult for genuine farmers to purchase the land they need for farming. To address this and concerns that Agricultural Relief is being used as part of tax planning strategies by wealthy individuals, I am extending the six-year active farmer test to the person who provides the gift or inheritance. This measure supports current farmers and the next generation.
Farmers flat rate compensation
Ceann Comhairle, the House will be aware that the flat-rate scheme compensates unregistered farmers on an overall basis for VAT incurred on their farming inputs. Based on macroeconomic data received from the CSO and the Revenue Commissioners for the period 2022-2024, it is proposed that this rate be increased from the current 4.8 per cent to 5.1 per cent from 1 January 2025.
Residential Zoned Land Tax (RZLT)
The Residential Zoned Land Tax is an important lever to activate the building of houses on appropriate sites which have been identified by local authorities across the country. It is important that the measure does not unduly impact landowners who carry out genuine economic activity on their land. Therefore, I am providing an opportunity for these landowners to avail of an exemption in 2025 if they seek to have their land rezoned to reflect the activity they carry out on their land. The Minister for Housing, Local Government and Heritage will issue guidelines to local authorities indicating that they should consider and accommodate rezoning requests where landowners seek to continue undertaking existing economic activity.
Sports and philanthropy
Sport
Making good on the commitment in last year’s budget speech, I will also be bringing forward measures to support national sporting bodies in planning and investing for the future.
Changes will be made to the tax exemptions that apply to those bodies to facilitate long term investments for the purposes of future capital projects, sport equipment needs, to support Ireland’s high performance athletes, and sports participation.
Furthermore, I will be bringing forward measures in the Finance Bill to allow those making donations to sports bodies, for capital projects, and the other objectives, greater flexibility on how those donations will be treated for Income Tax purposes. It is my intention that both PAYE and self-assessed donors will be able to choose for the income tax relief on donations under the relevant tax provisions to go either to themselves or to the sporting body itself. I believe that this will provide an additional incentive for taxpayers to provide direct support to their local and national clubs and bodies.
I strongly believe that physical activity is an essential part of supporting the health and mental wellbeing of all our citizens, young and old. As such, I believe there is merit in examining how the tax system can help to achieve greater participation in sport and fitness activities, including through gyms for example. Over the course of next year, my officials will continue this work with the view of developing proposals for consideration in advance of next year’s budget.
Charities/philanthropy
The five-year, National Philanthropy Policy, launched last December, is key to fostering a new approach to giving. As an initial step in supporting the policy, I will remove barriers to charities having access to tax benefits under the Charitable Donations Tax Scheme. Charities will no longer have to have been established for at least two years to access the scheme, and will have a longer time frame from the date of a donation to use the funds raised under the scheme for the important work they do.
Health
Tobacco
I am increasing excise duty on a packet of 20 cigarettes by €1, with a pro-rata increase on other tobacco products. This will bring the price of cigarettes in the most popular price category to €18.05 and supports public health policy to reduce smoking levels in Irish society.
A Financial Resolution will be introduced tonight to enact this measure.
E-cigarettes (eliquid excise)
I am introducing a domestic tax on e-cigarettes on public health grounds as there has been a significant rise in their use. The tax will apply to all e-liquids at a rate of 50c per ml of e-liquid. A typical disposable vape contains 2ml of e-liquid, and costs in the region of €8. This new tax will bring the price of such a product to €9.23 including VAT. Due to the operational and administrative challenges associated with this measure it will not commence until the middle of next year and therefore will be subject to a commencement order.
Stamp duty
Bulk purchase
I share the concerns of aspiring homeowners that the bulk acquisition of houses impacts on the number of houses made available for purchase. To discourage significant purchases of houses by investment funds, I am increasing the higher rate of stamp duty on bulk acquisitions of houses from 10 per cent to 15 per cent with immediate effect.
Bank levy
I will extend the Bank Levy for a further year, with a target yield of €200 million. It remains appropriate that the sector continues to make a contribution to the Irish economy following the support they received during the financial crisis.
Stamp duty on high value residential property
I have decided to increase the rate of stamp duty applicable to residential property valued above €1.5 million to 6 per cent with effect from tonight.
The existing rate of 1 per cent will continue to apply to values up to €1 million, and 2 per cent on values above €1 million, with a third rate of 6 per cent to apply to any value in excess of €1.5 million, with immediate effect. Normal transitional arrangements will apply for transactions in process.
Vacant Homes Tax
It is also important that we maximise the use of existing housing stock, therefore I have decided to increase the rate of the Vacant Homes Tax from 5 to 7 times the property’s existing base Local Property Tax rate. The increase will take effect from the next chargeable period, commencing this November.
Climate measures
This Government has been responsible for a step-change in Ireland’s climate actions and, as the threats from climate change continue to manifest themselves, I am pleased to announce several climate-related tax measures in Budget 2025:
VRT issues
I am making a VRT amendment in respect of battery electric commercial (BEV) vehicles, so that they can qualify for the €200 VRT rate. Currently, due to their battery weight, BEV’s are at a competitive disadvantage compared to their fossil-fuelled counterparts, and cannot qualify for this relief. Consequently, this amendment, will bring them within its scope.
I am also introducing an emissions based approach to VRT for B commercial vehicles. This measure will provide for a lower 8 per cent rate for category B vehicles with CO2 emission of less than 120grams per kilometre with a view to encouraging the purchase of such vehicles.
I am also providing for the Accelerated Capital Allowances scheme for Gas and Hydrogen-powered vehicles to be extended for a further year. This will allow the Department of Transport time to review the scheme to ensure it meets the needs of the heavy transport sector as they address the challenge of decarbonisation.
Emission thresholds
In relation to emission thresholds for vehicle capital allowances, I am planning to redefine the classification of a low emitting company car by reducing the maximum emission levels for qualifying for this relief for capital allowances purposes from less than 156 grams per kilometre to less than 141 grams per kilometre with effect from 1 January 2027. The rationale for the 2027 commencement date is to provide adequate notice to companies who provide such cars to their employees. This measure is designed to incentivise uptake of EVs in the company car sector which will over time assist the acceleration of a second hand EV market.
Carbon Tax
The rate per tonne of carbon dioxide emitted for petrol and diesel will go up from €56.00 to €63.50 from 9 October as per the trajectory set out in the Finance Act 2020. For other fuels, the rate increase will take place in May 2025, after the winter home-heating season. As per the commitment in the Programme for Government, and as noted with approval by the ESRI, revenue raised from this increase in carbon tax is recycled to ensure vulnerable persons are protected from unintended impacts of the tax increase, to part fund a socially progressive national retrofitting and energy efficiency programme, and to encourage and support farmers in the green transition.
Heat pumps
I have decided to lower the VAT charged on the installation of heat pumps from the standard rate at 23 per cent to the 9 per cent reduced rate. This measure will complement the government’s National Retrofit Plan to transform Ireland’s housing stock by retrofitting homes and installing heat pumps to replace older, less efficient heating systems.
Motor Insurers Insolvency Compensation Fund
On behalf of Minister of State Richmond and myself, I am pleased to announce that the Motor Insurers Insolvency Compensation Fund levy will be reduced from 1 per cent to 0 per cent. This reduction will benefit up to 2.2 million policy holders on renewal from 1 January 2025 and follows the reduction of this levy from 2 per cent to 1 per cent in budget 2024.
Review of funds sector
Ireland has a leading position in the investment funds and asset management industry globally. The sector is a significant employer, supporting almost 20,000 jobs, with close to half of these located outside of Dublin.
Last year my department established a Funds Review Team and began a detailed forward-looking review of the Funds sector with a view to safeguarding Ireland’s leading position in the investment funds and asset management industry.
I recently received their report, which I intend to bring to Government shortly and to publish thereafter. Following consideration of the findings, I will then outline the next steps.
Other measures
I am extending the excise relief introduced last year for independent small producers of cider and perry to cover what is known as other fermented beverages which includes products such as mead and wines other than grape wine such as elderberry wine, strawberry wine etc. In addition, I am extending this relief to higher strength cider and perry produced by independent small producers.
Conclusion
Ceann Comhairle, I believe that Budget 2025, is one that has the common good at its core. It allows us to ensure that we keep striving to provide better services and infrastructure for everyone, to build better communities and support social enterprise, to provide for those most in need, to ensure our indigenous businesses can grow and prosper and remain a highly attractive and competitive place for international investment and business.
On the same day it was announced I was to be appointed Minister for Finance this country lost one of the finest people, and undoubtedly the best commentator, we ever produced.
Micheál O’Muircheartaigh, a legend in our country, always had such a way with words and his knowledge of GAA was unsurpassed. He was so knowledgeable in other ways too. I was reading through some of his memorable quotes which illustrated his superb command of language and his wisdom.
Reflecting on his advice for young people on his 90th birthday, he said: “Always look forward to things. Look forward with hope. Hope is the greatest thing of all.”
As elected representatives I believe it is our responsibility and duty to foster a real sense of hope for the future, to inspire positivity, build a better State and demonstrate confidence about the possibilities ahead. This budget is about the future. It reflects a commitment and resolve to responsible politics, economic resilience and a fairer society ensuring that together we can build a prosperous future imbued with optimism and hope.
Ceann Comhairle, I believe Budget 2025 provides the ways and means for continuing to deliver many more, bright and hopeful days for us all.
All this and more can be achieved because of the decisions we are taking today for our people, our communities and our country.
As Gaeilge: Tá lánmhuinín agam as ár ndaoine agus as cumas na tíre i bhfad níos mó a bhaint amach. Tugann Buiséad 2025 an bunús é seo a dhéanamh”.
I commend the budget to the House.
