Budget 2025: A Breath of Fresh Air for Taxpayers
October 3, 2024, 10:01 am
Budget 2025 has arrived, and it’s like a gust of wind blowing through the often-stuffy corridors of taxation. For individual taxpayers, this budget feels like a long-awaited gift. It’s designed to tackle the pressing cost-of-living crisis while also addressing the rising property values that have burdened many.
The heart of this budget beats for the middle-income earners. With changes to tax bands and a reduction in the Universal Social Charge (USC), the government aims to put more money back into the pockets of those who need it most. The minimum wage will rise to €13.50 per hour starting January 2025, a move that aligns with the increase in the upper band of the second rate of USC. This ensures that workers won’t see their hard-earned money eroded by higher taxes.
The income tax landscape is shifting, too. The threshold for the higher rate of income tax will increase by €2,000 for all earners. This means that single individuals will now enjoy a higher cut-off point of €44,000. For married couples and civil partners, the benefits will be even more pronounced. The increase translates to a potential annual saving of €400 for singles and up to €800 for couples.
Tax credits are also on the rise. The personal tax credit, employee tax credit, and earned income credit will each see an increase of €125, bringing them to €2,000. This 6.6% boost is a welcome change, even if the automatic index-linking to inflation remains absent. Other credits, such as the home carer tax credit and the single person child carer tax credit, will also see increases, further easing the financial burden on families.
One of the standout features of Budget 2025 is the treatment of payments made to women affected by the CervicalCheck screening failures. These payments will be exempt from income tax, capital gains tax, and capital acquisitions tax. This compassionate move acknowledges the struggles faced by these women and provides them with some financial relief.
Pension reforms are also on the table. The Automatic Enrolment Retirement Savings Scheme (AE) is set to launch on September 30, 2025. This scheme aims to address the low rates of private pension coverage in Ireland. While employees will not receive tax relief on their contributions, employers will benefit from tax relief on their contributions. Growth in the AE funds will be tax-exempt, but retirees will face taxation on annuities.
The capital acquisitions tax thresholds are getting a much-needed facelift. The tax-free threshold for inheritances from parents to children will rise to €400,000, a significant increase from €335,000. This change marks the first update since 2020 and reflects the soaring property values that have made inheritances a pressing issue for many families.
In the realm of sports, the budget introduces greater flexibility for donations to sporting organizations. Donors will have the option to choose whether to claim income tax relief or allow the sporting body to claim it directly. This change could encourage more donations, fostering a stronger support system for sports in Ireland.
Despite the positive changes, some critics argue that the budget lacks support for entrepreneurs. The feel-good factor may not extend to those trying to build businesses in a challenging economic landscape. The budget is a balancing act, attempting to please various segments of society while navigating the complexities of fiscal responsibility.
For those looking to understand how these changes will impact their finances, the KPMG Budget 2025 calculator offers a straightforward solution. By inputting personal details, taxpayers can see how the new tax bands and credits will affect their monthly paychecks. This tool demystifies the budget, making it easier for individuals to grasp the tangible benefits.
As the dust settles on Budget 2025, it’s clear that the government is making strides to address the pressing issues facing taxpayers. The increases in tax thresholds, credits, and the minimum wage are steps in the right direction. However, the challenge remains to ensure that these measures translate into real, lasting change for all citizens.
In conclusion, Budget 2025 is a breath of fresh air for individual taxpayers. It acknowledges the struggles of the average worker while also laying the groundwork for future financial stability. The road ahead may still be rocky, but with these new measures, there’s a glimmer of hope for a brighter financial future.
The heart of this budget beats for the middle-income earners. With changes to tax bands and a reduction in the Universal Social Charge (USC), the government aims to put more money back into the pockets of those who need it most. The minimum wage will rise to €13.50 per hour starting January 2025, a move that aligns with the increase in the upper band of the second rate of USC. This ensures that workers won’t see their hard-earned money eroded by higher taxes.
The income tax landscape is shifting, too. The threshold for the higher rate of income tax will increase by €2,000 for all earners. This means that single individuals will now enjoy a higher cut-off point of €44,000. For married couples and civil partners, the benefits will be even more pronounced. The increase translates to a potential annual saving of €400 for singles and up to €800 for couples.
Tax credits are also on the rise. The personal tax credit, employee tax credit, and earned income credit will each see an increase of €125, bringing them to €2,000. This 6.6% boost is a welcome change, even if the automatic index-linking to inflation remains absent. Other credits, such as the home carer tax credit and the single person child carer tax credit, will also see increases, further easing the financial burden on families.
One of the standout features of Budget 2025 is the treatment of payments made to women affected by the CervicalCheck screening failures. These payments will be exempt from income tax, capital gains tax, and capital acquisitions tax. This compassionate move acknowledges the struggles faced by these women and provides them with some financial relief.
Pension reforms are also on the table. The Automatic Enrolment Retirement Savings Scheme (AE) is set to launch on September 30, 2025. This scheme aims to address the low rates of private pension coverage in Ireland. While employees will not receive tax relief on their contributions, employers will benefit from tax relief on their contributions. Growth in the AE funds will be tax-exempt, but retirees will face taxation on annuities.
The capital acquisitions tax thresholds are getting a much-needed facelift. The tax-free threshold for inheritances from parents to children will rise to €400,000, a significant increase from €335,000. This change marks the first update since 2020 and reflects the soaring property values that have made inheritances a pressing issue for many families.
In the realm of sports, the budget introduces greater flexibility for donations to sporting organizations. Donors will have the option to choose whether to claim income tax relief or allow the sporting body to claim it directly. This change could encourage more donations, fostering a stronger support system for sports in Ireland.
Despite the positive changes, some critics argue that the budget lacks support for entrepreneurs. The feel-good factor may not extend to those trying to build businesses in a challenging economic landscape. The budget is a balancing act, attempting to please various segments of society while navigating the complexities of fiscal responsibility.
For those looking to understand how these changes will impact their finances, the KPMG Budget 2025 calculator offers a straightforward solution. By inputting personal details, taxpayers can see how the new tax bands and credits will affect their monthly paychecks. This tool demystifies the budget, making it easier for individuals to grasp the tangible benefits.
As the dust settles on Budget 2025, it’s clear that the government is making strides to address the pressing issues facing taxpayers. The increases in tax thresholds, credits, and the minimum wage are steps in the right direction. However, the challenge remains to ensure that these measures translate into real, lasting change for all citizens.
In conclusion, Budget 2025 is a breath of fresh air for individual taxpayers. It acknowledges the struggles of the average worker while also laying the groundwork for future financial stability. The road ahead may still be rocky, but with these new measures, there’s a glimmer of hope for a brighter financial future.