As we inch towards the day of the budget reveal, the latest fiscal policy framework by this coalition of Fine Gael, Fianna Fáil and the Green Party is gradually unfolding.
They’ve been preparing for the past few months, putting together a financial package that includes €1.8 billion in increased spending and a €1.4 billion reduction in taxes, along with a minimum of €1.5 billion in one-off payouts. It is predicted that with a general election approaching, these figures will only swell further. They intend to supplement it with funds earned from the sale of AIB shares, planned to be used for infrastructure expenditures. An additional boost is expected from the significant €13 billion retraced tax from prominent US tech company, Apple, ordered by the EU.
All things considered, comprehending the budget is often complex, mixing numeric data with policies and politics. However, with an imminent election, you might be anxious to see what’s in store for your personal finance as the coalition takes their last gamble.
Looking at your tax payment, the most notable policy is a proposed 1 per cent cut in the universal social charge (USC) for those earning between €25,000 and €75,000. This suggestion was put forward by Fianna Fáil’s finance minister, Jack Chambers. There’s also an anticipated rise of approximately €2,000 in the threshold for the higher income tax bracket. Chambers is optimistic that the average worker would profit nearly €1,000 from the amalgamation of changes in tax and living costs. Both Fine Gael and Fianna Fáil are contemplating adjustments to the inheritance tax scheme. A likely development is the rise in the tax-free limit from €335,000 to €400,000 for children inheriting their parents’ wealth.
This could be significant for parents.
The Childcare fee cuts have reportedly reached their limit, with Green Party’s Minister for Children, Roderic O’Gorman, eyeing an extension of the primary funding scheme to support providers in handling an increased influx of children. As of last Friday, rumours of O’Gorman demanding more funding for this initiative than was allocated to the department for new policies painted a bleak picture. The trend seems to gear towards one-time payments, with parents possibly seeing a double-fold child benefit just before Christmas. Furthermore, the Green Party is advocating for a “baby boost” program, which would quadruple the child benefit for new parents. Though there was a potential €10 increase in the child benefit on the table, the likelihood of it is diminishing – but it is not completely off yet.
For school-attending children, it would be a significant surprise if the free senior cycle secondary school books program does not see further expansion. Education Minister, Norma Foley from Fianna Fáil, is known to be requesting funds to hire a minimum of 1,500 special needs assistants. There will also reportedly be a demand for an additional 350 special classes in the upcoming year.
For university students, a further decrease from the €3,000 registration fee hangs in limbo as budget discussions conclude. Minister for Higher Education from Fine Gael, Patrick O’Donovan, is advocating for an additional €500 atop the €1,000 one-time discounts seen in previous years; this would cut the costs in half for the following year, he also wants this to become a permanent action. O’Donovan also appears to have secured a 15 percent universal increase in the thresholds for Susi education grants. An extra funding of around €150 million appears likely for tertiary institutions, to be distributed over the next half-decade. A proposed €750 tax relief for the youth by Fine Gael’s Minister for Enterprise, Peter Burke, is seemingly unlikely to materialise.
For those renting or owning homes and those with mortgages.
Tenants are set to receive an additional €250 to their existing €750 tax credit for the current year and the forthcoming one, bringing their yearly total to €1,000. There is little likelihood of an expansion for the Help to Buy scheme, with no inclinations displayed towards policies that allow tenants to obtain the maximum payment of €30,000. Changes to the €500,000 cap on property prices for this programme also do not appear likely. However, the scheme is set to be prolonged for another year until the conclusion of 2026. Additional funding is being considered for the various housing programmes initiated by Fianna Fáil Minister for Housing Darragh O’Brien, including schemes for affordable housing and home buying, and it also looks likely that the €1,250 mortgage interest relief introduced in the previous budget may be extended. Higher grants for derelict properties remain uncertain, though an increment from the existing €70,000 grant has been proposed. Another feat is the anticipated electricity credit for all households before Christmas, predicted to be €250, a decrease from the total of €450 made in three payments last year.
As for the health service, the government allocated a significant €22.5 billion for the 2024 year; however, an additional sum of €1.5 billion was required due to an unforeseen expenditure. It is understood that a further €1.2 billion, necessary for the maintenance of current health services in 2025, was agreed as early as July, during the summer economic statement. Health Minister, Fianna Fáil’s Stephen Donnelly, has prioritised the need for funding for additional staffing n the health system. If funds are available, up to 300 hospital beds could be operational next year. A proposal for an increase in State-funded assisted human reproduction was suggested, though its inclusion remains unclear. There have been considerations for providing free prescribed contraception to women over 35. An extension of this scheme to 16-year-olds – amid its legal complexities – is not anticipated to be included in the Tuesday budget. Decisions regarding the health budget may be finalised last-minute on Monday.
Regarding business,
The lobbying for maintaining the hospitality sector’s 9% VAT rate continues strongly, although indications from the government suggest a rather bleak outlook. The choice appears to be between this tax reduction or personal income tax reformation. It’s possible for a middle ground to be found, but a widespread plan for businesses is not confirmed yet. Whilst the Green party proposed a rates abatement, there’s been recent skepticism from a Fine Gael insider about it. Nevertheless, suggestions are that projections of an increase to the minimum wage could be counterbalanced by an increase in lower-earning employee’s PRSI limit. Burke is also advocating for modifications to the research and development tax credit, a cut in CGT for business pioneers, a reduction in liquor tax to support the hospitality industry, and a VAT reduction for broadband bills.
In the agricultural sector, it’s believed that Fianna Fáil Agriculture Minister Charlie McConalogue is pushing for enhanced support schemes for a variety of farmers, encompassing sheep, beef, and mixed beef/dairy. He is looking for a €5 increase on the support for sheep farmers, raising it to €25 per ewe, and is securing funds for €100-per-hectare support for tillage farmers who began planting in 2024. Discussions have also been centered on guaranteeing funds for existing agricultural programmes like the Acres payment that promotes eco-friendly farming practices, which has exceeded sign-up expectations by 10%, reaching 55,000 farmers.
In regards to public transportation users and vehicle drivers, the temporary 20% reduction in public transport cost is expected to continue another year. To both save families money and decrease emissions, the Green Party has mooted the idea of broadening free public transport access to include children up to age nine (rather than the current age limit of five). The proposal’s €8 million cost doesn’t represent a significantly large sum if included in the overall budget.
Lastly, Fianna Fáil’s State Minister for Transport, James Lawless, continues to advocate for a resolution to a projected €40 million funding discrepancy for road upgrades as part of budget discussions. The welfare of carers and individuals with disabilities remains a key concern as well.
The Department of Social Protection is entering a phase of ongoing negotiations over the weekend. Stating her preferences, Heather Humphreys, the Social Protection Minister from Fine Gael, suggested she wants to aim welfare boosts at the most vulnerable populations, including carers, the elderly, and people living with disabilities. Preparations for €15 rises in state pension, disability payments, and carers allowance are underway, while a smaller increase is under contemplation for the unemployed. Opposition to these proposals has come from members of Fianna Fáil and the Green Party. It’s seeming more plausible that universal welfare raises, similar to last year’s €12 weekly increase, will come into effect. Additionally, Humphreys expressed her intentions to expand fuel allowance to individuals over 66; currently, it’s only applicable to those over 70. According to sources, as of Friday, there are no formal agreements on the budget for Social Protection.
Points of contention arose in disability expenditure as discussions move into the final weekend. Anne Rabbitte, Minister of State from Fianna Fáil, initially tabled new proposals costing €230 million, which has since been cut down to a request of €130 million, far from the estimated department-wide offering of around €60 million.
In terms of media and arts, hardly any information concerning conversations between Minister for Public Expenditure and Reform, Paschal Donohoe, from Fine Gael, and Catherine Martin, Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media from the Green Party, has been released. The forthcoming budget will allocate €42 million of public funding to the financially struggling and controversy-riddled RTÉ, and will likely offer €78 million for free television licenses for groups like the elderly. Martin confirmed on Wednesday that she isn’t seeking more funds for RTÉ.
Although there has been talk of expanding the basic arts income scheme, Martin stated that the results of the current pilot scheme are still being evaluated and thus this will be left to the incoming administration.
Relating to policing, justice, and defence, few details have been released about the pre-budget manoeuvring: it’s anticipated additional funding will be allocated for Garda recruitment and equipment, and watch for the decision regarding restoring fees for criminal barristers – a point of regular protest.
Funds have already been significantly put into the renovation programme for the Defence Forces. In addition, the naval staff at sea will witness a prolongation of their tax credit for another period of five years as declared in the upcoming budget. A surge in manpower is projected with financial backing for hundreds of extra personnel. Resources for external expertise will be included, along with capital investment for enhancements in radar and subsea technology. The Department of Foreign Affairs has guaranteed an unprecedented budget allocation for international development.