Budget 2025: Tax expert calculates exactly how much better off a 'just about managing' family will be
The expert also flags measures for those on minimum wage, renters, landlords and homeowners
A money and tax expert has given her verdict on exactly how much better off you could be in Budget 2025
Mary Moran, Tax Director, Grant Thornton Ireland, said: “The Budget intoduced a series of measures that will provide relief for households dealing with the hangover of the cost-of-living crisis.
"The standard rate band has been increased from €42,000 to €44,000 at the lower 20% rate of Income Tax, delivering a saving of €400 per individual where the band is fully utilised. An increase in the ceiling for the 2% rate of USC to €27,382 aligns this band with the increase in minimum wage to €13.50 per hour.
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"This ensures those on the minimum wage will remain outside the top rates of USC. The 4.0% rate of USC has been reduced to 3%, and this is applicable to income between €27,382 and €70,044.
"This along with the €125 increase on the main annual tax credits, means that the average middle-income family - the JAM (just about managing) families with two incomes totalling €90,000 will be circa. €1,627 better off per annum. While this will be welcome to JAM families, the increase in PRSI introduced in last year’s budget will reduce the positive impact of the above by approximately €90 per annum.
"Renters will benefit from the increase in the rent tax credit, from €750 per year to €1,000 from 2025. There is additional good news in that the €1,000 figure will also now apply for 2024 to give an additional €250 back in the short-term.
"Other welcome measures announced include the electricity credit, which is in place for the third consecutive Budget. It will take the form of two payments of €125 this time around which will provide an early Christmas present in December and relief in the new year.”
“Mortgage Interest relief has been extended to 2024. Relief is given on the increase on mortgage interest between 2022 and 2024, there has been no reference in the Budget to a review of the mortgage balance of €500,000.
"It’s positive to see that the pre-letting expenses for landlords has been extended out to the end of 2027. However, it will be disappointed to landlords to see no change to the €10,000 limit or vacant period mentioned in the Budget.”
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