Budget 2025: Tax cut for income up to €70,000 and added student and rent supports due

The rate of universal social charge (USC) on incomes between €25,000 and €70,000 is to be cut by a full percentage point under plans being considered by the Government for in Budget 2025.
The cut, based on a proposal devised by Minister for Finance Jack Chambers, is higher than had been anticipated – with an expectation that the cut would be 0.5 per cent, similar to last year. The move will bring down the level of USC levied on income between €25,760 and €70,044 to 3 per cent.
It is understood that there will also be other changes to tax credits and bands.
It is expected that eligibility for student support grants will be expanded in Tuesday’s budget, with income bands for Student Universal Support Ireland (Susi) grants to be expanded by up to 15 per cent across the board, meaning households with higher incomes will become eligible amid wage inflation and cost-of-living pressures.
The Government is also set to allocate €150 million for the third-level sector to make up a funding shortfall identified in 2022. The new allocation, which will be spread across five years, will see €50 million allocated in 2025 and €25 million annually for the remainder of the period. It comes on top of €106 million already allocated, bringing the total to €256 million.
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A push is still under way to increase the relief on student fees by a further €500 on top of the €1,000 agreed as once-off measures in recent budgets, as well as the potential to put those reliefs on a permanent footing.
Other parts of the Government negotiations are proving more contentious, with the budget for the Department of Children said to be a major sticking point heading into the final weekend of talks. The amount sought in new measures is said to be many multiples of the offer made by Minister for Public Expenditure Paschal Donohoe, which sources indicated was in the region of €50 million to €60 million.
A source said the ask for disability alone was €230 million, which has now been slimmed down to €130 million. Minister for Children Roderic O’Gorman was said to be seeking €68 million in additional funding for the National Childcare Scheme – again, more than was initially on offer for the entire Department.
There are meetings ongoing through the day within the Department to establish how to spread whatever money is available over a wide variety of schemes. The expectation is for more talks over the weekend.
Plans to expand the Government’s Help to Buy scheme which had been sought by Minister for Housing Darragh O’Brien look unlikely to be approved. While it is expected that the scheme will be extended for another year to the end of 2026, he had asked that renters be allowed to include previous rent payments when their eligibility for the highest level of funding – €30,000 – was being assessed, as opposed to tax payments.
There was also a move to increase the cap on the value of houses eligible for the scheme above €500,000, but sources believe these are not likely now. However, a top-up of €250 in addition to a €750 renter’s tax credit for this year has been agreed.
There are growing expectations that a deal will be struck on the residential zoned land tax (RZLT), which caused significant tension between Government parties over the summer when it was floated that it would be delayed, with the Green Party strongly objecting.
Government sources indicated that a deal in principle is close to being agreed, with more talks between Coalition leaders scheduled over the weekend.
The three party leader are also understood to have agreed on a €250 tax credit for renters being applied next year, bringing the relief up to €1,000 per tenant.