Budget 2024 was set against the backdrop of rising inflation and was very much pitched as being a cost of living budget, with measures aimed at relieving pressure on beleaguered families. Whilst families are still under pressure, over the last year there have been some positive indicators: interest rates which had gone through a cycle of increases have started to fall. In addition, a recent report on grocery inflation has indicated that prices have steadied at less than 3% over the last 12 weeks.
Notwithstanding these positive indicators, An Taoiseach confirmed last month that the upcoming budget will include a new cost of living package that will help families and households. A major cost of living plan is set to be unveiled as part of Budget 2025. We have set out below what we can expect to see in Budget 2025.
Tax
Minister for Finance Jack Chambers alluded to “tax breaks for families, workers and businesses”. The Minister has indicated that workers would see benefits of at least €1,000 from a mixture of income tax reductions and from cost of living measures. The minister has said that any one-off measures in Budget 2025 will be on a much lower scale than seen in previous years.
It is expected that the standard rate band will increase from €42,000 to €44,000. It also expected that the first €20,000 that a worker earns will be sheltered from income tax through tax credits increases. The Minister has also indicated that a reduction in the USC would form part of the income tax reductions. This would play very well with the electorate. As RBKTax have mentioned previously, USC is an extremely unpopular tax and is associated with austerity measures.
Given the pressure in the housing market, we expect to see an increase in the rental tax credit, potentially being increased to €1,000.In addition another proposal being looked at is a new mortgage interest relief scheme.
Families
Tánaiste Micheál Martin confirmed that there would be provisions made in Budget 2025 for free school books for children of all ages. This is an extension of the current scheme which provides free school books to primary level children.
It is expected that there will be a repeat to the once off double monthly child benefit payment in advance of Christmas. We may also see a monthly increase of €10 per child. There may be a permanent reduction of €500 to the student contribution fees. It is also expected that third level grants could increase with a 10% increase in household income threshold for grants also on the table. We also expect that an electricity credit will be announced and paid out by December of this year along with an extension of the reduction in the VAT rate on energy costs.
A cut in public transport costs is expected in Budget 2025. The Green party has tabled a very interesting proposal to extend free public transport to all children under nine. This proposal has real merits both in the context of relieving pressure on cash strapped families and also in encouraging the move to public transport. These provisions would very much be in line with climate action and would be positive measures, seeking to reduce emissions and congestion.
The cost of childcare is becoming very topical and it is likely that it will become a real issue in the general election campaign. We could very well see the Minister seek to get out in front of the opposition with some targeted childcare proposals in Budget 2025.
Social Welfare
Minister for Social Protection Heather Humphries has indicated that there will not be an increase to jobseekers allowance. However, it is expected that the Christmas bonus will be repeated this year along with a double payment for those in receipt of fuel allowance.
Minister Humphreys is reported to be pushing for at least a €20 weekly increase in maternity, paternity and parents’ benefits. There are also reports that the government are considering an increase of €12 per week to the State pension.
Over the next few weeks in the lead up to Budget 2025 #RBKtax will look at potential tax measures that the Government could consider and provide insights into Budget 2025.
Budget Briefing Hybrid Event
RBK will be holding its annual Breakfast Budget Briefing as a hybrid event in person at the Athlone Springs Hotel in Athlone and streaming live online on Wednesday, 2nd October. Mike Scanlan, Tax Director, RBK will be analysing the tax measures announced in Budget 2025 and David McNamara, Chief Economist with AIB will look at the economic outlook.
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Contact Us
For more advice and support or to discuss personal taxes, please contact a member of the RBK Tax Team:
Laura Melia - Senior Tax Manager - (01) 6440 100
