Press release
Budget 2025 tax changes on 1 January 2025
Published on
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Published on
Last updated on
The Minister for Finance Jack Chambers reminds taxpayers that the personal tax package announced in Budget 2025, takes effect from Wednesday 1 January 2025.
Speaking today, Minister Chambers said:
“Several of the changes which I announced in Budget 2025 take effect from 1 January 2025.
"This includes a substantial personal tax package of €1.6 billion.
"With increases to the main tax credits and the standard rate cut-off point, together with reductions in USC, this package is primarily aimed at supporting those on lower and middle incomes, and builds on the progress already made by Government over its term.
"A number of tax credits are increasing to support individuals and families with caring responsibilities. My budget package will be of direct benefit for all those who pay income tax.
"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.
"As part of the continued support of renters, particularly with cost of living pressures, the value of the Rent Tax Credit is increasing to €1,000 for 2024 and 2025.
"I also announced two changes in Budget 2025 to incentivise the uptake of electric vehicles. The exemption so that a director or employee will not pay BIK on the installation of a home charger, and the amendment of the weight ratio requirement for commercial electric vehicles to qualify for the €200 category C VRT rate will also be effective from 1 January.”
From 1 January the Standard Rate Cut Off Point will increase from €42,000 to €44,000, with proportionate increases for married couples and civil partners.
The main tax credits, the Personal, Employee and Earned Income Credits, will increase by €125 to €2,000. The following tax credits, which support families and those with caring responsibilities will also increase:
The Blind Person's Tax Credit will also increase by €300 to €1,950.
Turning to USC, the 4% rate will be reduced to 3%, its second consecutive reduction. Also, in step with the 1 January increase in the national minimum wage by €0.80 per hour to €13.50 per hour, so as to continue to ensure that these valued workers remain outside the higher rates of USC, the entry threshold to the new 3% rate is increasing by €1,622 to €27,382.
The Rent Tax Credit for 2025 will increase to €1,000 (or €2,000 for a jointly assessed taxpayer unit) for private tenants who are not in receipt of other State housing supports.
In addition, the Rent Tax Credit for the tax year 2024 has also been increased retrospectively to €1,000 (or €2,000 for a jointly assessed taxpayer unit). This increase for the tax year 2024 can now be claimed from Revenue. Eligible taxpayers who have already claimed the credit at the previous rate of €750 for 2024 may claim up to an additional €250 (or €500 for a jointly assessed tax-payer unit).
From 1 January 2025, a benefit-in-kind (BIK) exemption will apply to the installation of a battery electric vehicle (BEV) home charger by an employer at a director’s or an employee’s private residence. This means that a director or employee will not pay BIK on the installation of a home charger, which is required for work purposes and aims to support the rollout of BEVs in the commercial fleet.
Finance Act 2024 amended the weight ratio requirement from 130% to 125% for commercial electric vehicles in order to qualify for the €200 category C VRT rate. This amendment comes into effect from 1 January 2025.