Budget season can feel a bit like a national event in Ireland, sparking conversations in homes, pubs, and workplaces across the country. This year’s budget has brought some notable changes that aim to put more money in people’s pockets and tackle rising living costs. With tweaks to income tax, increases in the minimum wage, and support for those feeling the financial squeeze, many are wondering how these decisions will impact their everyday lives. Let’s break down the key changes and what they mean for your income and overall financial health. Key Changes in the Recent Budget: Income Tax One of the most anticipated aspects of the budget is the adjustment of income tax bands and credits. This year, the government announced a €2,000 increase in the standard rate tax band, which effectively means that individuals can earn more before moving into the 40% tax bracket. There is also a €125 increase in the main income tax credit. And the 4pc rate of Universal Social Charge is also set to drop to 3pc. Many of the big accounting firms in Ireland have shared handy tax calculators online so you can find out the exact impact on your take home pay. One such example can be found here; https://kpmg.com/ie/en/home/insights/2024/10/budget-2025-tax/income-tax-calculator.html. Cost of Living Supports Recognizing the ongoing cost of living crisis, the budget includes measures aimed at providing financial support to families and individuals. Direct payments and targeted benefits for those struggling with rising energy and housing costs can help individuals maintain their standard of living, indirectly affecting overall income stability. There was also a specific focus on new and young families in this Budget with the following initiatives put in place: Double payments of child benefit in November and December Double payment of the foster care allowance €400 lump sum payment for working family payment recipients €100 lump sum payment per child to recipients of qualified child increase payments National childcare scheme funding to rise by 44%, resulting in reduction of fulltime childcare costs by €1,100 New ‘baby boost’ one-off payment of €420 for each newborn child from 1 January Free public transport to be extended to children aged five to eight. Social Welfare Adjustments For individuals receiving social welfare payments, adjustments in benefits play a significant role. The budget has proposed increases in various social welfare payments, including; Double payments for some social welfare recipients in October, including children’s allowance €12 increase for those receiving weekly Social Protection payments Carer’s allowance means test disregard to increase to €625 for a single person and €1,250 for a couple Domiciliary care allowance to increase by €20 and carer’s support grant to rise by €150 to €2,000. These will help support those who may not benefit directly from tax changes or wage increases. This is particularly important for vulnerable populations, including the elderly and those with disabilities. Investment in Public Services and Housing While not a direct increase in income, the budget’s commitment to improving public services, such as healthcare and education, can significantly impact individuals’ overall financial well-being. Better access to quality services can reduce personal expenditures, allowing individuals to allocate their incomes more effectively. A raft of measures in relation to housing were also announced by Minister, who said he wanted to give certainty to future homebuyers and recognise the cost-of-living pressures currently being faced by renters. The rent tax credit will rise to €1,000, and to €2,000 for a jointly assessed couple An additional €1.25bn will be made available to the Land Development Agency Help to Buy scheme will be extended until the end of 2029 Properties worth over €1.5m will pay 6% stamp duty Existing 1% stamp duty to apply to values up to €1m and 2% above €1m Relief for pre-letting expenses for landlords extended for three years Vacant homes tax increased from five to seven times the property’s existing base Local Property Tax rate. Overall, this year’s budget is a mixed bag for many people in Ireland. While there are some promising changes—like increased tax bands and a higher minimum wage—that could boost take-home pay, it’s important to remember that the real test will be how these adjustments hold up against rising costs. Many individuals and families will benefit from direct supports, but the ongoing challenge of inflation means we still need to be cautious. Staying informed about these changes can help you make better financial decisions for you and your family. As with any change in your financial situation, this may be a good time to review your own financial plans and how this may affect them. To book a complimentary review with an IPF Advisor, you can visit www.ipf.ie.
