Ireland to Introduce Tax Cuts for Earners Up to €44,000 in 2025 Budget
Dublin: In the upcoming 2025 budget, individuals earning up to €44,000 in Ireland will benefit from a reduced income tax rate, down from the previous threshold of €42,000. These earners will now only be subject to a 20% tax rate, reflecting a €2,000 increase in the taxable income limit. Additionally, the government is set to lower the existing Universal Social Charge (USC) from 4% to 3% for those earning between €25,760 and €70,044. This tax relief measure is part of a broader package aimed at supporting low- and middle-income earners, a proposal championed by Fianna Fáil.
Former Finance Minister Micheál McGrath had reduced the USC by 0.5% last year, and this year’s move continues that trend. The proposed changes, introduced by Finance Minister Jack Chambers in collaboration with Public Expenditure Minister Pascal Donohoe, have been accepted in principle by the government following discussions with party leaders. Further talks regarding other aspects of the budget are expected to take place over the weekend.
Ireland’s Record Budget Surplus
Ireland’s government is now considered in the “super-rich” category, with a record budget surplus of €25 billion expected this year. This surplus, more than double the anticipated amount, includes a €14 billion windfall from Apple’s unpaid taxes. Ministers Jack Chambers and Pascal Donohoe are expected to announce a range of economic benefits and tax cuts as part of the upcoming budget, which is likely to be unveiled on Tuesday.
With speculation of a general election in November, this year’s budget is anticipated to offer more generous benefits than usual. The total budget expenditure is projected to reach €105.5 billion, including tax relief measures, pension increases, and significant investment in childcare, transport, infrastructure, and housing.
Fiscal Strength Boosted by Apple and Corporate Tax Windfalls
Ireland’s fiscal strength has been largely buoyed by a substantial increase in corporate tax revenues, particularly from Apple. The country is expecting €30 billion in corporate tax revenue this year, an increase of €5.5 billion from previous estimates. Of Apple’s €14 billion escrow fund, €8 billion will flow into the exchequer this year, with the remaining balance being accounted for in future financial planning.
Finance Minister Chambers has indicated that details regarding the allocation of Apple’s windfall, along with other economic measures, will be revealed in Tuesday’s budget announcement. While the cost-of-living package may be smaller than last year due to reduced inflation, the government is expected to deliver substantial economic support through targeted tax cuts and public investment.
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