Legislation for 2025 tax year
Description

These are the key tax measures in the Budget Statement announced by the Minister for Finance on 1 October 2024.

 NOTE: To view a summary of Budget 2025, go to revenue.ie


Pay as you earn (PAYE)

  • The standard rate cut-off point (SRCOP) increases by €2,000 from €42,000 to €44,000
  • The SRCOP for the calculation of tax for employees on the emergency basis increases by €38 per week or €166 per month
  • Personal, employee, and earned income tax credits all increase by €125 each
▼ Tax rates and tax bands

Personal circumstances

2025 €
Single or widowed or surviving civil partner, without qualifying child 44,000 @ 20% Balance @ 40%
Single or widowed or surviving civil partner, qualifying for single person child carer credit 48,000 @ 20% Balance @ 40%
Married or in a civil partnership, one spouse or civil partner with income 53,000 @ 20% Balance @ 40%
Married or in a civil partnership, both spouses or civil partners with income 53,000 @ 20% with increase of 35,000 max. Balance @ 40%
▼ Tax credits
Tax credit 2025 €
Single person 2,000
Married or in a civil partnership 4,000
Employee Tax Credit 2,000
Earned Income Tax Credit 2,000
Widowed person or surviving civil partner (without qualifying child) 1,900
Incapacitated Child Credit 3,800
Blind Tax Credit
Single person
Married or in a civil partnership:
  • one spouse or civil partner blind 
  • both spouses or civil partners blind
1,950

1,950

3,900
Dependent relative 305
Home carer tax credit 1,950

Universal Social Charge (USC)

2025 € Rate
Income up to 12,012.00 0.5%
Income from 12,012.01 to 27,382.00 2%
Income from 27,382.01 to 70,044.00 3%
Income above 70,044.00 8%

National minimum wage (NMW)

For hours employees work on or after 1 January 2025, the NMW rate increases by 80c from €12.70 to €13.50 per hour.


PRSI threshold increase

There's an increase to the PRSI threshold from 1 January 2025 due to the NMW increase.

The threshold increases from €496 to €527 per week.


Statutory Sick Pay

As the Department of Social Protection is yet to confirm the entitlement increase from five to seven days, we won't include this in the year end update.

However, if the Minister or the Department of Social Protection confirms a change, we'll provide a further software update.


Small benefit exemption

  • Employers can give staff bonuses worth up to €1,500. This is an increase from €1,000 in the previous year’s budget
  • These benefits must not be in cash
  • An employer can grant up to five non-cash benefits to an employee in a single year under this exemption. That's an increase from the current limit of two

Employer provided vehicles - benefit in kind (BIK)

  • A reduction of €10,000 applies to the original market value (OMV), to reduce the amount of BIK payable. For all cars in Category A, B, C and D (not E) and all vans
  • The current reduction of €35,000 in OMV continues to apply for all electric vehicles
  • The lower mileage limit in the highest mileage band that applies to employer-provided cars remains at 48,000 for 2025
  • A BIK exemption for expenses incurred by an employer in providing electric vehicle (EV) charging facilities at the home of a director or employee

What does this mean for payroll?

Your payroll year end software update includes the legislation changes ready for the 2025 tax year.

All you need to do is download and install the Sage Payroll year end update.


Changes to employees

You can import your 2025 tax year Revenue Payroll Notifications (RPNs). These RPNs are normally available from Revenue in week two of December.

You can then start to set up your software for processing in 2025.

RPNs in 2025 show whether an employee is in receipt of a State Pension (Contributory).


What's coming later in 2025 

  • The rollout of the auto-enrolment pension scheme is delayed to 30 September 2025
  • SEPA changes will be introduced by November 2025
  • We're developing an online payslips service that integrates with Sage HR, allowing employees to securely access their payslips online. We aim to release this service in 2025

Related Solutions

What's new in Sage Payroll year end update

Legislation for Irish payroll