Ahead of Budget 2025 in October, here are eight matters to look out for:
Inheritance tax
At present if somebody inherits from a parent, they pay 33% capital acquisition tax on everything above 335,000.
This threshold will almost certainly rise to €400,000.
The €65,000 increase will be welcomed by many in the context of rising house prices.
However, it is worth bearing in mind this ceiling was €542,000 in 2009 and was reduced in line with the falling property market following the financial crash.
The move to raise the point at which the tax is paid reflects the fact that houses and apartments have more than doubled in price since 2013.
Rent tax credit
This is a tax credit which is offered to tenants.
The Government has been steadily increasing it over recent years.
Last year, it rose from €500 to €750.
It is almost certain to increase to €1,000 in October’s Budget.
Energy credit
There will be another energy credit that will be paid in the fourth quarter this year.
But the feeling in the Cabinet is that a line should be drawn under these subsidies, now that the worst of the energy crisis has passed.
Last year, the credits were €150 each.
Tax bands
When wages are rising, the point at which people pay the 20% and 40% tax rates should go up too. This is called indexation.
It should probably be included automatically in the Budget but instead the Government makes it part of the announcement on the day.
At present, after a tax credit a single person pays 20% tax on income up to €42,000 and 40% on everything above.
Pay Related Social Insurance and the Universal Social Charge are also levied.
According to the Central Statistics Office, weekly and hourly earnings are up 5% in the second three months of this year compared to the same period in 2023.
In theory the point at which people pay the higher rate of tax should rise too.
Recently, Taoiseach Simon Harris hinted at an adjustment, saying “nobody on the average wage should be paying the higher rate of income tax”.
So, the Government will raise the point at which people pay the higher rate of tax.
It is also possible there will be an increase in the tax credit.
USC
The Taoiseach promised a “USC reduction package” in Budget 2025 when he was speaking at the annual dinner of employers group IBEC.
It looks very likely the Government will adjust this again.
Last year, the 4.5% rate was cut by 0.5% to 4%.
Minimum wage
The Low Wage Commission recommended an increase of €1 to €13.70.
Usually, the Government follows the commission’s recommendations.
However, that may not be a given on this occasion.
Social welfare
Minister for Social Protection Heather Humphreys is expected to seek a €12 increase for people in receipt of weekly payments in Budget negotiations.
Any increase is likely to focus on pensioners, carers and people with disabilities.
It is possible those who have been in receipt of Jobseekers Allowance for some years will not benefit from a similar increase.
It is expected Minister Humphreys will seek a double Child Payment which would be made before Christmas, as it was last year.
This will come out of 2024 spending instead of next year’s funding.
Help to Buy
The Help To Buy scheme has been a significant part of the Government’s Housing for All strategy.
Under the programme, first time buyers purchasing a new home can get €30,000 of income tax paid over the past four years returned to them by the Revenue Commissioners.
At present that scheme only applies to properties worth up to €500,000.
Minister for Housing Darragh O’Brien wants to see that ceiling increased to properties worth more than €500,000.
He also wants the scheme expanded so that if buyers have not paid €30,000 in taxes in the past, they may be due a tax credit in recognition of rent paid.
But that proposal may not happen and there are reservations about the scheme among economists.
The Government hired consultants Mazars to examine it.
Mazars concluded many of the people who used the scheme did not need the money.
