Budget Summary

Summary of the main Budget measures plus an outline of other tax changes implemented recently which impact the farming sector

Budget 2025*

• Income Tax rates, bands & credits
• PRSI and USC
• Stock Relief
• Stamp Duty
• Capital Acquisitions Tax (CAT) and Capital Gains Tax (CGT)
• Other Miscellaneous Taxes
• Social Welfare
• Other Measures

Selected Specific Measures Relating to Agriculture

Download Teagasc Finance Bill and Budget 2025 Summary(PDF)

Main headline items

• The income tax standard rate bands have been increased by €2,000. The income tax rates (20% & 40%) have not been changed.
• There has been a €125 increase in the principal tax credits.
• The rate applying to the middle USC band has been reduced from 4% to 3% . There has also been a realignment of the bands.
• PRSI rates are due to increase by 0.1% from 1st October 2024.
• The three Stock Relief measures have been further extended
• Changes will kick in from 1 Jan 2025 to the Capital Gains Tax (CGT) Retirement Relief upper limits with changes to the upper age from age 66 to age 70 where limits are reduced. The €10 million limit applying to transfers from parent to child will also carry a longer clawback period to be complied with by the recipient.  The €10 million limit applying to transfers from parent to child will be set aside for the CGT on such disposals where the recipient retains the assets for 12 years.
• The Capital Acquisitions Tax (CAT) thresholds have been increased  with effect from 02 October with no change in the rate. A change has been made to Agricultural Relief whereby the Active Farmer conditions will also apply to the donor with transitional arrangements on the term in place until 31 December 2030. 
• A new residential Stamp Duty rate will apply from 2 October on properties with a value greater than €1.5 million.
• The existing relief from Stamp Duty on certain farmland leases will now also be available to company lessees subject to certain criteri.
• The VAT flat rate farmer addition rate is to increase from 4.8% to 5.1% from 1st January 2025 There are also changes to the VAT registration thresholds.
• There have been significant changes to Social Protection Payments for 2025 with a general €12 weekly increase applied. Some additional once off cost of living support payments have also been announced.
• Additional funding has been allocated for specific measures relating to Agriculture.

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Income Tax Rates, Bands and Credits

The standard rate bands have been increased as shown below with the income tax rates (20% & 40%) remaining unchanged for 2025.

Income Tax Credits

Tax Credits are applied as a straight deduction from an individual’s income tax, as calculated by applying the two tax rates and using the bands outlined above. There has been an increase of €125 in the principal tax credits with €300 added to the Incapacitated Child Tax Credit.

* The Earned Income tax credit is calculated at 20% of an individual’s earned income (excluding earned income that is taken into account for the PAYE Tax Credit) subject to a maximum of €2,000.  Where an individual has earned income that qualifies for the Earned Income Tax Credit and PAYE Tax Credit, the combined tax credits cannot exceed €2,000

Age Exemption Limits

There are income thresholds set for people aged above 65 years and below which they can earn income and pay no income tax. These thresholds remain unchanged.

Single – €18,000
Married – €36,000 

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PRSI and USC

PRSI

Farmers pay the self-employed rate of PRSI known as Class S PRSI. This is applied to all ‘Reckonable income’ for the purposes of PRSI (profit after capital allowances but before reliefs and deductions) – there is only one rate so no bands apply. As was announced in Budget 2024 last October all PRSI rates including the Class S rate will increase by 0.1% from 1st October 2024. The revised Class S PRSI rate will therefore be 4.1% from 1st October 2024. There will be further incremental increases in the Class S rate as follows over the following four years finalising at a rate of 4.7% by October 2028.

Universal Social Charge

The Universal Social Charge is payable on gross income after relief for certain trading losses and capital allowances, but before relief for pension contributions.

*Self-employed individuals with annual income exceeding €100,000 are subject to a 3% additional surcharge – an effective 11% rate of USC. Those in receipt of PAYE income only in excess of €100,000 will be subject to a max USC rate of 8%.

The lower exemption threshold above which income becomes liable to the USC will remain at €13,000.

The USC rate applying to the middle band has been reduced from 4% to 3%. The bands for the 2% and 3% USC thresholds have been adjusted in line with the change in the minimum wage.

The marginal rate of tax for employed / self-employed individuals (under 70 years) with a maximum income below €70,044 is as follows:

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Stock Relief

Stock Relief for Registered Farm Partnerships and Stock Relief for Young Trained Farmers have been extended until 31 December 2027.

Stock Relief for Registered Farm Partnerships gives relief to qualifying partners in an RFP at 50% on the increase in the value of trading stock over an accounting period. The State Aid threshold has an increased upper limit of €20,000 in place since 1st January 2024 for the cash equivalent of the relief that can be claimed over 3 years.

Stock Relief for Young Trained Farmers gives relief at 100% for the first four years of trading on the increase in the value of trading stock over an accounting period. This relief can be availed of by young farmers operating in a sole trade or an RFP but note the State Aid limits.

General Stock Relief, which is available to all farmers at the 25% rate, has also been extended until 31st December 2027.

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Stamp Duty

There was no change to the stamp duty rates applying to non-residential property. A new 6% rate has been introduced for residential property. The stamp duty rate of applying on the bulk buying of residential property (10 or more houses in 12 mths.) will increase from 10% to 15% – targeted at purchases of these properties by investment funds.

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Capital Acquisitions Tax (CAT) & Capital Gains Tax (CGT)

The rate of CAT is unchanged at 33%.

CAT Tax Free Thresholds

Capital Acquisitions Tax -Agricultural Relief

Introduced in this budget is the new requirement for the donor (person giving the gift) to also meet the Active Farmer Test for the beneficiary to avail of Agricultural Relief.

The conditions for a beneficiary (recipient of a gift or inheritance) to avail of CAT Agricultural Relief are set out as follows:

• The beneficiary must meet the Farmer Test (the 80% agricultural property test) on the valuation date
• Both the donor and the beneficiary of the property subject to the relief must satisfy the Active Farmer Test as set out below. More detail on the operation for the donor will be in the Finance Bill

To meet the Active Farmer Test both the donor and the beneficiary must either:

• Hold (or obtain within 4 years of receiving the property) a recognised agricultural qualification (as listed for the young farmer stamp duty exemption qualifications listed in schedule 2 or 2A to the Stamp Duties Consolidation Act 1999) AND who farms the property on a commercial basis with a view to the realisation of profits for a period of 6 years from the valuation date for the property. OR
• Spend 50% of that individual’s normal working time* farming agricultural property (including the property received) on a commercial basis with a view to the realisation of profits for a period of 6 years from the valuation date for the property. OR
• Lease the whole or substantially the whole (75% by value) of the agricultural property, comprised in the gift or inheritance for a period of not less than 6 years commencing on the valuation date of the gift or inheritance, to an individual who satisfies either of the previous two criteria.

*Definition of “normal working time”

• Normal working time including both on-farm and off-farm working time approximates to 40 hours per week.
• An individual spending an average of 20 hours per week working on the farm will meet the 50% of normal working time criteria.
• Where it can be shown that an individual’s normal working time is less than 40 hours a week, then the 50% requirement will be applied to the actual hours worked, subject to the overriding requirements that the farm be farmed on a commercial basis and with a view to the realisation of profits.

Capital Gains Tax (CGT)

The rate of CGT is unchanged at 33%.

Capital Gains Tax – Retirement Relief

This relief is available to individuals who dispose of eligible chargeable business assets on or after reaching the age of 55. From 1st January 2025 a number of changes are being implemented to the operation of the relief in particular where disposals are made to children. 

From the 1st January the upper age limits applicable in order for the maximum limits for the relief to apply rises from 66 years to 70 years. The minimum threshold age in order to qualify for retirement relief remains at 55. In addition a new upper limit of €10 million worth of asset values will apply for disposals to a child that take place prior to the disponer reaching the age of 70. Previously there was no upper limit on this relief where the disponer had not reached the age of 66.

This budget also introduces a CGT clawback period of 12 years on the recipient for disposals over €10 million on which Retirement Relief was claimed. The normal clawback period applying for Retirement Relief is 6 years.

CGT Farm Restructuring Relief

To enable farm restructuring, relief from Capital Gains Tax has been available (subject to conditions) where land is disposed of by either sale or exchange and the proceeds have been reinvested into other land resulting a new farm holding with reduced distance between the parcels that make up the holding

The deadline for the completion of the first restructuring transaction is 31st December 2025.  Both restructuring transactions must be completed within a 24 month period.

The guideline document for this relief (& Consolidation Relief from Stamp Duty) is available here

Capital Gains Tax – Entrepreneur Relief

This relief applies a reduced CGT rate of 10% on gains from the disposal of qualifying business assets. Assets owned by both sole trader and companies and used in the trade could potentially qualify.

There is a lifetime limit of €1 million on the gains that you can claim relief on. Only gains on disposals made on or after 1 January 2016 are counted in the limit. You must have owned the business assets for a continuous period of three years. The three years must be in the five years immediately prior to the disposal. The business asset must be used for a qualifying business.

More details on the operation of the CGT Entrepreneur relief are available here

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Other Miscellaneous Taxes

Corporation Tax

For farms that are trading as companies there is no change proposed to the corporation tax rate which will remain at 12.5%.

Value Added Tax (VAT)

• The flat rate farmer addition rate is to be increased from 4.8% to 5.1% from 1 January 2025
• The VAT rate applying to sales and purchases of livestock remains at 4.8%.
• The standard rate of VAT remains at 23% and the 13.5% rate remains unchanged.
• The VAT thresholds will increase to €42,500 for services and to €85,000 for goods.
• The 9% VAT rate for gas & electricity has been extended until 30 April 2025.

Deposit Interest Retention Tax (DIRT)

This is a tax on interest paid or credited on deposits of Irish residents. There has been no change in the DIRT rate applied – it remains at 33%.

Dividend Withholding Tax (DWT)

The rate of Dividend Withholding Tax remains at 25%. 

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Social Welfare Payments

A €12 increase in the main weekly payments is being applied for 2025, to be introduced in January 2025.

**Means Tested Payments

Selected Weekly Increases [applied to selected weekly payments listed above]

There is an increase in the Qualified Child Payment of €4 per week, this applies to all weekly payments.

The monthly Child Benefit will remain at the €140 rate for 2025 and there will be two double payments of this benefit in November and December 2024.

There will be a double payment of all other welfare payments in October (cost of living bonus) and December (Christmas Bonus). The Christmas bonus will be paid to those getting a long term social welfare payment in December 2024. The Christmas bonus has also been extended to those who have been getting Illness Benefit for 12 months or longer.

More detail on the Social Welfare rates can be found here

Other selected Social Welfare measures announced

Bonus Lump Sum Payments on existing welfare payments

• Working family payment Bonus – €400.
• Carers Support Grant Bonus– €400
• Living Alone Allowance – €200
• Child Support Grant (formerly qualified child) – €100
• Fuel Allowance will be extended to over-66s and there will also be a €300 lump-sum payment for recipients of the benefit
• Over-70s are to benefit from a Universal Companion Pass initiative allowing anyone over 70 to bring a companion on public ­transport free of charge.
• Free public transport will be extended to children under nine (currently under five)
• Parents of children born after 1 January 2025 will receive a special one-off Newborn Baby Grant of €280 in addition to the first month of Child Benefit – total of €420
• €15 weekly increase in maternity, paternity and parents’ benefit increasing the weekly rate to €289
• Carer’s Support Grant to be increased to €2,000 and there will be a €20 increase in the Domiciliary Care Allowance
• Carer’s Allowance means test limits to increase to €625 per week for a single person and €1250 per week for a couple
• Pay Related Benefit Scheme which ensures that people with a strong work history receive enhanced benefits if they lose their employment will commence on 31st March 2025
• Auto Enrolment – the new retirement savings scheme for employees who do not already have a workplace pension scheme or an additional pension arrangement will commence on 30th September 2025

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Other Measures 

• Cigarettes – Exercise duty on a pack of 20 cigarettes will rise by €1 with a pro-rata increase on other tobacco products.
• Vapes – from the middle of next year an additional 50 cent tax per ml of e-liquid will apply
• Electricity Credits – a total of €250 will be paid to each household in two instalments of €125 with the first instalment paid before Christmas and the other in 2025
• Help to Buy Scheme – has been further extended until the end of 2029.
• Small Benefit Exemption – employers can give up to five (increased from two) small benefits each year up to a combined benefit of €1,500 (up from €1,000)

Residential Zoned Land Tax

Residential Zoned Land Tax (RZLT) is an annual tax. It is calculated at 3% of the market value of land within its scope. RZLT will apply to land that on, or after, 01 January 2022, is zoned for residential use and serviced. In general, land is serviced where it has sufficient access to the infrastructure required for residential development. This includes roads, paths, lighting and access to water supply and services, including sewers and drainage.

The first liability date for Residential Zoned Land Tax (RZLT) is deferred until 01 February 2025. Registration for RZLT will open in early December 2024.  Where farmland is subject to the RZLT the landowner will be given an opportunity to seek a change in zoning in 2025 to reflect the fact that the existing economic activity being carried out on the land is farming related.

Tax Credit on Rental payments for a Principal Private Residence

This tax credit on rent paid for the family home which was introduced in last years budget is to be increased from €750 to €1000 per year for 2024 and 2025. It will apply to taxpayers who are paying rent on their principal private residence and will also apply to parents who pay for their student children’s rental accommodation in the case of Rent a Room accommodation.

Education Measures

• Student’s college & apprentice fees will be reduced by €1,000
• Postgraduate students will see their fee contribution grant increase from €4,000 to €5,000.
• Free School Book Scheme, further extended from September 2025 and will now cover students at both primary and secondary level up to the Leaving Cert
• Increased funding for the School Transport Scheme
• Fees will be waived for school State exams next year.

Statutory Minimum Wage

The statutory minimum wage is to increase by €0.80 from its current rate of €12.70 per hour to €13.50 per hour from 1st January 2025.

Carbon Related Measures

Carbon Tax—the rate of Carbon Tax will increase by €7.50 from €56 per tonne to €63.50 per tonne. This increase will be applied to auto diesel and petrol with effect from 9 October 2024 and will add 2 cent per litre to petrol and 2.5 cent per litre to diesel. This increase will be applied to all other fuels with effect from 1 May 2025.

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Schedule for Finance Act

The measures outlined in the budget will be published in the Finance Bill 2024.

It will be debated by both houses of the Oireachtas and will be signed into law as Finance Act 2024 in mid to late December.

Proposed Finance Bill Schedule

• Finance Bill published – 10 October 2024
• Committee Stage – 5 – 7 November 2024
• Report Stage – 19 – 20 November 2024
• Seanad Report Stage – 11 December 2024
• President signs Finance Act 2024 – on/ before 25 December 2024

References

Department of Finance Budget Section

Department of Social Protection

Department of Agriculture, Food & the Marine

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Important Note

This summary is based on the author’s interpretation of the relevant Budget and Finance Bill measures and should not be taken as a definitive interpretation of these measures. For all individual tax queries you are advised to seek professional tax advice from your own accountant/ tax adviser.