The 2025 Budget was announced on Tuesday, 1st of October, 2024. The Budget contained a
number of changes that employers and employees need to be aware of from a HR
perspective.
What is the Budget 2025?
The Budget is the amount of money the Government has to spend each year, and what it
decides to spend it on. On Budget Day, the Government will give a detailed breakdown of
how much money it expects to collect in the year ahead (income) and how that income will
be spent across all Government Departments (expenditure).
How will the Budget affect HR matters in 2025?
A total of €1.03 billion has been allocated to the Department of Enterprise, Trade and Employment in 2025.
1. Wage increase
It was announced that the minimum wage will increase from 1 January 2025. The
national minimum wage for people aged 20 and over will increase by €0.80 per hour,
bringing it to €13.50 from January 2025. This increase is part of ongoing efforts to
support low-income earners
2. Increase of Tax Rates
Income Tax: The Standard Rate Cut-Off Point will rise by €2,000, meaning a single person
will now pay 20% tax on earnings up to €44,000. Proportionate increases apply for married
couples and civil partners.
PRSI: Although not a Budget 2025 measure, it’s important to note the incremental increases
in PRSI rates announced in October 2023. Starting from 1 October 2024, PRSI will rise by
0.1% across all rates, with another increase planned for the following year.
Tax Credits: In line with the increases in the main personal tax credits last year, Budget
2025 proposes a further €125 increase in the personal tax credit, the employee tax credit
and the earned income credit, from €1,875 to €2,000.
3. Universal Social Charge (USC)
The Universal Social Charge (USC) is tax you pay on gross income, including notional pay
(notional pay is a non-cash benefit, such as benefit-in-kind), after any relief for certain capital
allowances. If your total income is €13,000 or less per year, you do not pay any USC. If it is
more than €13,000 per year, you pay USC on your full income.
As in previous years, the minister announced an increase to the upper limit of the second
USC rate (2%) to ensure that workers earning the new minimum wage don't lose out due to
higher USC rates. The new upper limit will rise to €27,382, an increase of €1,622.
Additionally, the minister announced a reduction in the USC rate from 4% to 3% for income
up to €70,044.
4. VAT Rates
The VAT registration thresholds for businesses will rise to €42,500 for services and €85,000
for goods. Additionally, the first-year payment threshold under the Research and
Development (R&D) regime will increase from €50,000 to €75,000. The extension of the 9%
VAT rate on gas and electricity provides crucial relief for businesses, especially small and
medium-sized enterprises (SMEs), by reducing operational costs. Disappointingly, there was
no reduction in the VAT rate for the hospitality sector with the rate remaining at 13.5 %.
Any employers with questions about how the 2025 Budget affects them can contact GHR
Consulting on their free helpline below.
