Budget 2025
It’s been one of the most hotly anticipated budgets in recent years and today the details of Budget 2025 have been announced.
As we now have come to expect, most changes had already been disclosed by the media before being announced, specifically around social welfare and key tax changes.
The widely anticipated Automatic Enrolment Retirement Savings Scheme (AE) is to begin on 30 September 2025. Finance Bill 2024 will provide for the taxation of AE and will align with PRSAs, other than for employee contributions. As the State is making a top up for employees within AE there is no tax relief being provided for employee contributions.
In terms of pension policy, no additional changes were announced given the recent publication of a review of the Standard Fund Threshold (SFT) setting out proposed changes commencing in 2026. At a high level these include:
- Phased increases in the SFT of €200,000 per year beginning in 2026 until 2029 reaching €2.8 million and then converging the level of SFT with the applicable level of wage growth
- Both elements of the pension lump sum will remain at the current levels and not increase as future increases to the SFT are applied
- Rate of Chargeable Excess Tax is to remain unchanged at 40% for now, however a specific review of the rate is to take place by 2030
The main changes are as follows:
- An increase in the tax-free threshold for gifts and inheritances
- Group A threshold from €335,000 to €400,000
- Group B threshold from €32,500 to €40,000
- Group C threshold from €16,250 to €20,000
- The level at which earners begin to pay the higher rate of income tax will go up by €2,000 to €44,000
- USC:
- increase in the ceiling for the 2% rate by €1,622
- 4% rate is reduced to 3%
- An increase in the Personal, Employee & Earned Income Tax Credit from €1,875 to €2,000
- €12 increase per week in main welfare payments and State pension
- Retirement relief:
- Increased upper age limit is retained
- Introduction of a clawback period of 12 years for relief available for disposals over €10 million
- Minimum wage to rise from €12.70 to €13.50
We will likely see the changes to the SFT along with today’s tax changes included in this year’s Finance Bill expected next week.
You can find out more detail in our updated pension and tax facts document.