Meet the budget’s real winners: A family of five on an income of more than €70,000

The sample families drawn up by the Department of Finance — and newspapers — to illustrate the impact of the budget often tell interesting stories. Two “families” in the department’s booklet this year caught my attention. Their fortunes tell us a lot about the budget and a good bit too about the decisions to come.
Let’s first look at the story of Kevin and Audrey who rely on Audrey’s €54,000 income as a nurse and Niamh and Brendan who are both wage earners and have a joint income of €115,000. As calculated by the department, the first couple — on a lower income — get an “overall benefit” of €1,615 from the budget. Our higher-income couple get €2,283. Now this is complicated by the fact that this includes both once-off payments, mostly given out this year, and permanent tax and welfare changes, coming next year. There is a touch of adding apples and oranges together here.
There are a few key points to note. One is that the gains rely heavily on how many children a family has. Kevin and Audrey do better on this score as they have two children (Joshua and Olivia, seeing as you asked) versus one (Kasey) for Niamh and Brendan, the better-off couple. This means — adding in the energy credits — that the two-child family will receive €810 in once-off payments, versus €530 for the other family.
And there is no limit on the child benefit largesse in terms of family size. So while a middle-income household with no children may get just €250 in energy credits from the cost-of-living package, one with, say, four children would get €1,370 when the two double payments are added in. Budget 2025 is a case of quids for children.
The second key point about who gets what in the budget is due to the change in the universal social charge (USC) and specifically the cut in the main rate that applies on income from about €25,000 to €70,000 from 4 per cent to 3 per cent. To get the full benefit of this, not surprisingly, you have to earn €70,000 or more. Add in income tax and PRSI changes and the higher income couple gains €1,753 from the permanent budget changes — in other words excluding the once-offs — while the lower income one gets €805. While short-term cash is nice, these permanent changes are more important as they are locked in for the future.
There are twists and turns and some lower-income families will gain from higher working-family payments. But in broad terms, the interplay of the temporary and permanent measures means that this is a budget for better-off people with children — the more the better. They gain from extra child benefit in the short term and more generous tax and USC changes in the longer term. Overall gains for many larger families will approach €3,000.
The extraordinary decision to pay child benefit twice in November and December — the “double-double” — is central to this. This is aimed at the large swathe of middle-aged voters — sorry, hard-pressed families — and the timing is tilted towards an early election.
By next year the cash boost will be gone and younger families might ask what the Government’s actual strategy is — or more specifically the plan the Government parties will put before the electorate. There has been additional support for childcare companies and parents in recent years, but big questions remain about the future of this sector, that were not answered on budget day. Moving up the age chain, school places remain in short supply as the population grows. University costs have been cut again — but this is on a once-off basis.
Crucially, housing is expensive and in short supply and rents are stratospheric. Billions extra have been allocated to investment here — that is welcome — but big questions remain about delivery. Forecasts in the budget documents suggest that despite insistence from the Taoiseach that almost 40,000 houses would be completed this year, officials do not expect any uplift from last year’s levels of around 33,000.
Renters will get a welcome tax credit hike, but those who bought on higher mortgage rates over the last couple of years will look on askance at the entirely predictable decision to extend mortgage interest relief — introduced last year on strictly “once-basis” – for another year, at a cost of €40 million. This helps those who bought before 2008 on tracker rates, but does nothing for purchasers over the past year or two at borrowing costs that are just as high as those now paid by tracker holders. This is because the relief is based on the increase in repayments, rather than their size. Along with the hike in inheritance tax thresholds, it illustrates the real political power of the tracker generation.
Meanwhile, younger voters are being bought off with the pre-Christmas cash. The Economic and Social Research Institute’s post-budget analysis points clearly at some of the problems the Government has created here for its successor. Once-off payments have been important in giving short-term support to households and were a decent strategy when trouble hit suddenly as energy prices soared in 2022. Not repeating them yet again next year would leave many households worse off. Already, some households will feel the pinch in 2025 as the latest batch of once-off cash runs out.
But they are unfocused and the institute’s researchers point out that the amount spent on universal cash payments could have funded one year’s worth of a new second-tier of child benefit to lift 40,000 children out of poverty. Once-offs, in other words, are not a long-term strategy.
This may all come home to roost soon enough. The longer-term budget forecasts have the exchequer cash position — a key determinant of budget largesse — worsening significantly from 2026 on. This is partly due to the commitment to put €6 billion and rising each year into two new State funds to help pay for future spending and investment, so is not as bad as it looks. But it will be interesting to see if this commitment to stashing money away, rather than spending it now, survives contact with tighter budgetary sums in the years ahead. Come next year’s budget, households will again be looking for cash support. If the money is there, politicians will find it impossible to say “no”.