Budget 2025: I pay 42% tax, what does it mean for me? Your questions answered

Q: Is there anything in this budget on EV cars and incentivising further their purchase? Anything on widening the amount one does not pay tax if one to rent a room in their own home? – From AJ
A: Budget 2025 includes a number of incentives in relation to electric vehicles, such as a new BIK exemption on home chargers installed by employers at the home of an employee or director and an extension of the €10,000 threshold on BIK for cars for 2025.
There has been no changes to the Rent a Room Scheme announced in the budget which lets you earn up to €14,000 per tax year tax-free if you rent a room in your home to private tenants. – BP
Housing
From Paul
Q: We entered into binding contracts to purchase a new home a number of weeks ago. The sale is due to close next week. The purchase price is in excess of €1.5 million.
Do we have to pay the 6 per cent rate over €1.5 million even though binding contracts were executed long prior to stamp rate change in today’s budget?
A: A 6 per cent rate of stamp duty was introduced with effect from today for the purchase of residential property valued at above €1.5 million.
The existing rate of 1 per cent will still apply to the first €1 million, and the 2 per cent rate will apply to the next €500,000, with the excess over €1.5 million liable to 6 per cent.
Transitional arrangements will apply for deals where binding agreements have been entered into before today and that are completed before January 1st (where certain certification is included in the transfer instrument). – BP
Housing
From Barry Aston
Q: Mortgage interest relief remains in place for 2025. Are there limitations to those who can access, or is the relief accessible to all mortgage holders?
A: Mortgage interest tax relief, which was introduced on a temporary basis in Budget 2024, is being extended by one further year.
Qualifying homeowners will be eligible for the relief in respect of the increased interest paid on their mortgage in the calendar year 2024 over the calendar year 2022 at the standard rate of income tax (20 per cent), capped at €1,250 per property.
There is no change to the qualifying criteria for the relief, including the qualifying homeowners must have an outstanding mortgage balance on their PPR of between €80,000 and €500,000 on December 31st, 2022. – BP
Tax
From Geraldine O’Callaghan
Q: What is the capital gains tax allowance between siblings?
A: Capital acquisitions tax covers large gifts (over €3,000 in a year) and inheritances and, from today, the maximum you can receive from a sibling is €40,000 – up from €32,500 previously.
However, that €40,000 limit covers all large gifts and inheritances you have received from any brother or sister since December 5th, 1991.
Anything you got since then from a grandparent, a great-grandparent or a uncle or aunt related by blood is also taken into account.
So if you are fortunate in your relatives, you can hit even that new threshold quite quickly. Capital gains tax relates to something different – profit made on the sale of assets – though the 33 per cent tax rate is the same. – DC
Tax
From Tadhg O’Brien
Q: Is there any change to the deemed disposal tax?
A: No changes were announced to the deemed disposal regime for fund investors. It may be that something emerges in the Finance Bill as Minister Jack Chambers did say that he had recently received the report of the Funds Review Team which was examining this and related issues.
However, I wouldn’t hold your breath. He said he intended to bring the report to Government “shortly”, then publish it and, “following consideration of the findings”, outline the next steps.
Given the timings involved and the likelihood of a general election, I think it is more likely that any real change will not happen until next year. – DC
Infrastructure
From Shakib Ahmed
Q: What does this budget do for public transportation?
A: From the user side of things, the discounted fares will continue to the end of next year. Free public transports will now be widened to include all children under the age of nine, up from five previously. That apart, the Minister said the allocation to Transport would allow for capacity improvement and the roll out of new services. – DC
Tax
From Noel Hanney
Q: Was there any reduction in USC for taxpayers over 70?
A: There is no change in Universal Social Charge rates for people over the age of 70, unless their income is over €60,000 a year in which case they will benefit from the one percentage point reduction in the 4 per cent rate (to 3 per cent) and the widening of the 2 per cent income band. – DC
Social Welfare
From William Shea
Q: Was there any increase in the living alone allowance from €22 apart from lump sum of €200?
A: The weekly rate of the living alone allowance remains unchanged at €22. The only increase, as you note, is the €200 lump sum payment under the cost of living package. – DC
Tax
From Clare
Q: Can a single person with no children elect a person to bequeath their estate to? Who can then receive the equivalent tax free allowance as a child would? Is there any way to bequeath your estate as a single person with no children without the government getting such a large chunk?
A: There is no facility to avail of the most generous Category A tax free threshold – now €400,000 – unless you have children.
If you are a single person, any beneficiary will pay tax at 33 per cent on anything you leave them over €40,000 if they are a sibling, a niece or a nephew, or €20,000 otherwise …and that is if they have not inherited before from anyone to whom they have a similar relationship. – DC
Education
From Richie
Q: Does the €1,000 education benefit apply to postgraduate and evening courses?
A: Under the cost of living package outlined by Paschal Donohoe, the State contribution to postgraduate tuition fees does increase by €1,000, but only for those in receipt of a student grant. – DC
Tax
From Conor
Q: If I am purchasing a house for €2 million, does the following stamp now apply:
A: That is the case. You will pay €50,000 in stamp duty on a property valued at €2 million, compared to €30,000 on the same property before yesterday’s budget, a difference of €20,000 in the purchase cost for you.
When this applies depends on where you are in the process. It kicks in from today if you have not already signed a binding contract.
However, if you have a binding contract signed before close of business yesterday – and I gather there was a flurry of such activity – then you have until January 1st to conclude the deal and pay stamp duty under the old regime. After January 1st, it will apply regardless to all sales. – DC
Pensions
From Yvonne
Q: Is there any change to pension limits from €2 million?
A: Changes to the €2 million cap on tax relief for pensions under what is called the Standard Fund Threshold were already announced by the Minister last month. There was no further announcement made in the budget. – DC
Social Welfare
From Michael O’Sullivan
Q: Has the disability weekly payment increased?
A: As with all social protection payments, the means tested Disability Allowance weekly payment will increase by €12 from January next to a maximum of €244.
There will be an €8 rise in the additional qualified adult payment, where applicable, to €162 and the related child support (increase for a qualified child) weekly payments will be €4 higher for a child under the age of 12 at €50 and €6 higher for older children at €62.
The maximum rate of the non-means tested Disablement Benefit will also be €12 a week higher at €275. – DC
Business
From John Fahy
Q: Are there any changes to entrepreneur relief or retirement relief, which was promised as small businesses are being discriminated when it comes to exit?
A: No changes to entrepreneurs’ relief were announced in the budget. However, there was a positive change to Angel Investor Relief, which is targeted at encouraging business angel investment in innovative start-ups, which was announced in Budget 2024 and will commence shortly.
It is proposed to increase the lifetime limit on gains, on which the reduced rate of capital gains tax (CGT) applies from €3 million to €10 million.
CGT retirement relief also got a mention in the budget. The age limit increase from 66 years to 70, which was included in Budget 2024, is to be retained.
While somewhat unclear, it would appear that the €10 million cap which was also included in Budget 2024, may be replaced with a requirement for the beneficiary to hold the business assets for a period of 12 years in order to avoid a clawback of the relief.
We will need to see the detail in the Finance Bill to be able to confirm the position. – BP
Universal Social Charge
From Hazel Farley
Q: How is the cut in USC applied if you earn over €70,044? Do I pay 3 per cent up to the maximum and 4 per cent over €70,044?
A: There have been some changes to the USC. The ceiling of the 2 per cent rate increased by €1,622 to €27,382 and the 4 per cent rate has been reduced to 3 per cent. The 8 per cent USC rate still applies to incomes over circa €70,000. – BP
Tax
From Rebecca
Q: Can you tell me what the new capital gains tax will be? I have a property which I am selling.
A: Unfortunately there has been no changes to the capital gains tax rate, which is currently 33 per cent. – BP
Tax
From Rob
Q: Do we know from what date the capital acquisitions tax threshold increases will kick in, and, if we have already settled a capital acquisitions tax payment with Revenue for an inheritance received earlier in the year, will we be entitled to a refund?
A: The new capital acquisitions tax thresholds only apply to gifts and inheritances taken on or after today. – BP
Tax
From Ross
Q: As a single person, what does this budget mean to me?
A: There have been a number of tax changes which might apply. The entry for the 40 per cent income tax rate has been increased by €2,000.
There have also been a number of changes to the USC such as increasing the ceiling of the 2 per cent rate by €1,622 to €27,382 and cutting the 4 per cent rate to 3 per cent.
The Rent Tax Credit has also been increased by €250 for those who are renting. – BP
Tax
From Joan
Q: Have any changes been made to inheritance tax in terms of sister to sister? Has the threshold been raised from the paltry €30,000?
A: Yes, the group B tax free threshold (which applies to gifts and inheritances between close relatives) has been increased from €32,500 to €40,000. This change applies to gifts or inheritances taken on or after today. – BP
Tax
From Mary Cullen
Q: Is there any talk of reducing CAT for group B or C? For someone not married or who has no family and wishes to leave their estate or part of to a nephew or niece? Those groups are crucified with a huge tax bill. Very unfair as they would have paid huge tax in their working career and these groups may be their only family. Has the government even considered this?
A: There has been a small change to the group B and group C tax free thresholds. The group B threshold has increased to €40,000 (from €32,500) and the group C threshold has increased to €20,000 (from €16,250). – BP
College
From John
Q: What action has been taken on third level fees?
A: Similar to last year, a once off €1,000 reduction in the student contribution fee has been included in the budget. – BP
Inheritance
From Sean
Q: My father passed last year and we obtained grant of probate for his will in August this year. I am preparing to make my inheritance tax return before the end of October. Will I be assessed according to the old or new rules then?
A: You will be assessed on the tax free threshold that was in place when he died, so €335,000 in your case. That threshold includes any other gift over the value of €3,000 you may have received from either parent and also any inheritance you may already have received from your mother if she predeceased your father. – DC
Tax
From Joseph F Murray
Q: What weekly benefit will a married couple, on combined salary of €90,000, see from the changes made in USC and income tax? Thank you.
A: There have been increases to the entry level for the 40 per cent income tax rate and also to the USC, which should mean an increase in take home pay.
The level of the increase in take home pay will depend on your individual circumstances. For an accurate calculation of the tax savings based on your individual circumstances please see our budget calculator.
Business
From Sean Brennan
Q: Has the cap on retirement relief been scrapped?
A: The commentary in the budget is a little unclear, but my reading is that the €10 million cap that was introduced in Budget 2024 will be replaced with a requirement that the beneficiary must keep the business assets for 12 years. We will need to see the detail in the Finance Bill to be able to confirm the position. – BP
Tax
From Karen
Q: A close family member died this past Spring – probate is still not underway. Will the new inheritance threshold apply to us? Is the threshold amount linked to the date of death or to the date probate is granted?
A: You generally look at the date of death as being the relevant date. So if the person has died before today then the new CAT thresholds are unlikely to apply.
The answer might be different if the assets pass into a trust on the death of the deceased. In this case, the appointment of the assets from the trust would generally be the relevant date, and where that date is on or after today, then the new CAT thresholds should apply. – BP
Tax
From Mary McCarthy
Q: My husband and I both pay 42 per cent tax. We own our home and have no children. We both pay USC. What is there for us in the budget?
A: Well, you will benefit from the widening of the standard (20 per cent) income tax band by €2,000 to €44,000 if you are taxed as single people. If taxed as a couple, the 20 per cent band for the higher earner rises by €2,000 to €53,000, with the 20 per cent widening to €35,000 for the lower earner – again a €2,000 increase.
The widening of the 2 per cent band of Universal Social Charge by €1,622 to €27,382 will also benefit you as will the €125 per person increase in both the personal tax credit and either the employee or the earned income tax credit. All those credits will now be worth €2,000 apiece, up from €1,875. – DC
Childcare
From Jean
Q: What does the €1100 reduction to childcare costs actually mean? Are the fees set to come down again?
A: As of now, you are subsidised by €2.14 an hour for up to 45 hours a week under the universal (non means tested) childcare subsidy. That figure will rise by 47 cent to €2.61 an hour. The increase will also apply to the Income Assessed (means tested) subsidy. – DC
Business
From Michael McDowell
Q: Any changes to Employment Investment Incentive Scheme for angel investors and startups?
A: The angel investor capital gains tax relief, which is targeted at encouraging business angel investment in innovative start-ups, was announced in Budget 2024, and will commence shortly.
It is proposed to increase the lifetime limit on gains, on which the reduced rate of capital gains tax applies, from €3 million to €10 million. – BP
Tax
From Sean Brennan
Q: Will the cap on the transfer of family business of €10 million be scrapped or deferred?
A: The commentary in the budget is a little unclear, but my reading is that the €10 million cap that was introduced in Budget 2024 will be replaced with a requirement that the beneficiary must keep the business assets for 12 years. We will need to see the detail in the Finance Bill to be able to confirm the position. – BP
Tax
From Jean Carmena
Q: Will inheritance tax threshold increase apply to estates currently in probate?
A: No, the new rates come into force only for estates of people who die from today onwards – October 2nd. – DC
Tax
From Deborah Ryan
Q: Any changes to Inheritance Tax?
A: Yes, some good news on the thresholds! The group A threshold which generally applies to gifts and inheritances to children has been increased from €335,000 to €400,000. The group B threshold (which applies to close relatives) has been increased to €40,000 (from €32,500) and the group C threshold has been increased to €20,000 (from €16,250). These changes come into effect for gifts and inheritance from October 2nd. – BP
Housing
From Gearóid Dardis
Q: Are self-employed people able to avail of the Renters Tax Credit?
A: Yes, anyone who is renting should be able to avail of the Rent Tax Credit. This credit is being increased by €250 to €1,000 for a single person or €2,000 in the case of a married couple who are jointly assessed. The increase applies to 2024 and 2025. – BP
Do you have a question about this year’s budget? Dominic Coyle of The Irish Times and Beryl Power from PwC are today answering readers’ questions in our post-budget live blog. Submit your questions now using the form below.
Good morning and welcome to our Budget 2025 Q+A.
Yesterday’s budget, with an election around the corner and a recent boon in tax receipts, was billed as the biggest bonanza budget in the history of the State, and in some respects, it has lived up to that billing.
Here we are going to dig down into the detail of what it all means for you with Dominic Coyle of The Irish Times and Beryl Power from PwC.