Minister Donohoe announces changes to Local Property Tax to ensure fairness
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From: Department of Finance
- Published on: 1 April 2025
- Last updated on: 1 April 2025
- Local Property Tax (“LPT”) revaluation to take place on 1 November 2025, with the next valuation period commencing in 2026 for a duration of five years
- valuation bands will be widened by 20 per cent, ensuring most homeowners remain in their existing band. A new base rate of 0.0906 per cent will apply
- base LPT charges will increases by between 5-6 per cent for properties valued under €1.26 million. Properties higher than €1.26 million, or properties that have appreciated significantly in value since 2021, will pay LPT that is proportionate to these factors. Properties valued at €2.1 million or above will be charged on their actual value
- an estimated 96 per cent of properties in the State will remain in their existing band, with the majority of property owners—those with properties valued at €525,000 or lower on 1 November 2025—paying between €5 and €25 extra a year. Properties above that value, or properties which move up a band, will see a higher increase in their LPT charge
- indexation of income thresholds for deferral of LPT, keeping pace with inflation and growth in wages and State payments since 2021
- local authorities will now be able to vary LPT upwards by up to 25 per cent. The maximum they may choose to vary LPT downwards by will remain at 15 per cent
The Minister for Finance Paschal Donohoe has today published the Heads of the Finance (Local Property Tax) (Amendment) Bill 2025 following approval from Government at the Cabinet meeting. This Bill will provide for a new method of calculating Local Property Tax (“LPT”) liabilities in advance of the new valuation period set to commence in 2026, with reference to the self-assessed market values as of 1 November 2025.
The proposed changes to LPT will mean that most homeowners will remain in their present valuation bands. Base LPT charges will increase a small amount, in proportion to property values. A small number of properties will pay a larger amount than before, either as a result of moving valuation band, or due to their existing high value. The next valuation period will last for a period of five years (2026 to 2030), with revaluation to take place again on 1 November 2030.
The income thresholds for deferral of LPT will be adjusted to account for inflation, wage growth and increases in State payments since 2021. This decision follows a recommendation made by the 2019 Review Group on LPT. The existing thresholds will increase by between 30 per cent and 40 per cent, depending on personal status and whether the threshold is in respect of full or partial deferral.
Additionally, a change is being made to the Local Adjustment Factor (LAF), which allows local authorities to vary the amount of LPT collected in their area. From 2026 onwards, local authorities will be able to vary LPT collected upwards by a maximum of 25 per cent. The maximum they may choose to vary LPT downwards by will remain at 15 per cent.
The changes together are expected to generate approximately 8 per cent additional yield for LPT annually, with this additional yield accruing to local Authorities for their discretionary use. The Bill proposes to make a number of other small changes to LPT and other tax provisions.
Commenting after the government meeting today, Minister Donohoe said:
“Together with my government colleagues, I have worked to find a way that will deliver on our commitment to ensure fairness in relation to Local Property Tax. Given the growth in property prices in recent years, the proposed changes are fair, progressive, and will ensure consistency and stability in the upcoming valuation period.
“By asking property owners to contribute a small amount more than they do at present, LPT is projected to yield in the realm of €45 million or 8 per cent in additional funding for local authorities, which will go towards local services. The majority of property owners, being those with properties valued at €525,000 or lower on 1 November 2025, will pay between €5 and €25 extra a year.
“According to the Central Statistics Office, property prices have increased by a national average of 23 per cent since November 2021. In the absence of any changes to the LPT charging mechanism, approximately 70 per cent of households would go up at least one valuation band as a result of revaluation later this year. It was decided to amend the LPT charging mechanism in order to prevent a significant increase in liabilities for most households. The Programme for Government commits to ‘ensure fairness and stability in Local Property Tax payments and continue to retain revenue collected locally in the same local authority’. I believe that the measures announced today achieve that objective.
“The next step is to prepare the legislation to implement these changes to allow Revenue make the necessary preparations for the valuation of residential properties and the introduction of the new charging structure.”
The General Scheme of the Bill is published below, which includes further detail on the proposed operation of these changes.
It is the Minister’s intention to have the Bill enacted before the summer recess to enable the Revenue Commissioners to make the essential technical and administrative preparations to implement the various changes to the LPT regime in advance of the valuation date of 1 November 2025.
General Scheme of Finance (Local Property Tax) (Amendment) Bill 2025
Notes
Background
The Local Property Tax (LPT) was introduced in 2013 and was designed to provide a stable source of funding for local authorities. LPT has yielded approximately €6 billion since its introduction. It is a self-assessed tax charged on the market value of residential properties in the State. Liable persons must pay their LPT liabilities on an annual basis.
LPT has helped to deliver significant structural reform through broadening the base for taxation in a manner that does not directly impact on employment. As a measure that is a tax on assets, not employment, the Local Property Tax does not adversely affect job creation.
For the valuation period 2022 to 2025, the tax is payable annually on the self-assessed market value of residential properties as of 1 November 2021. A new valuation period is scheduled to commence in 2026, with reference to self-assessed market values as of 1 November 2025.
Property price growth and statistical analysis
According to the Central Statistics Office, property prices have increased by a national average of 23 per cent since November 2021 to the current valuation date. Property prices have had greater proportional increases outside of Dublin, with 33 per cent property price growth recorded in the Boarder, West and Mid-West regions. However, average property prices in Dublin, for all types of residential properties, also increased by 18 per cent.
Various scenarios have been analysed and considered, including no policy change, changes to the valuation bands, changes to the base rate of LPT, and changes to both mechanisms, with consideration to what these changes would mean for property owners as well as the overall yield. These scenarios were based on a dataset prepared by the Revenue Commissioners based on the existing LPT register, the Central Statistics Office Residential Property Price Index, and Stamp Duty transaction data.
The analyses are based on economic modelling and the predicted outcomes can offer only indicative rather than certain conclusions. The analyses can provide only a very broad picture of the estimated effects on taxpayers.
New basis for calculating taxpayers’ LPT liabilities
The new approach approved by Government is as follows:
- all valuation bands will be widened by 20 per cent. Band 1 is expanded from €1 to €240,000 and Band 2 contains values in the range €240,000 to €315,000. All subsequent bands increase in increments of €105,000
- the fixed charges for Bands 1 & 2 will be increased: from €90 to €95 for Band 1, and from €225 to €235 for Band 2
- the basic rate of LPT is to be decreased from 0.1029 per cent to 0.0906 per cent, which will apply on properties valued up to €1.26 million. This will result in a small increase in base LPT charges, as midpoints increase as a result of band widening
- for properties in Bands 3-19, charges are calculated by applying the base rate of 0.0906 per cent to the band’s midpoint value
- properties in Bands 12-19 (between €1.26 million and €2.1 million) are charged at 0.0906 per cent on the first €1.26 million, with a subsequent 0.25 per cent on the balance of midpoint value in excess of €1.26 million
Properties in Band 20 (over €2.1 million) are charged on actual property values as before under the following formula:
- 0.0906 per cent on first €1.26 million, plus:
- 0.25 per cent between €1.26 million and €2.1 million, plus:
- 0.3 per cent on the value over €2.1 million
This new rate, in tandem with the widening of the bands and the corresponding increase in midpoint values, means that base LPT charges will increase by 5 or 6 per cent for properties valued under €1.26 million that remain in their existing band. This will be the case for an estimated 96 per cent of properties in the State. A small number of properties will pay proportionally more under these proposals, due to band movement or due to being of higher value. For properties between €1.26 million and €2.1 million in value, base LPT charges will increase by 7 to 14 per cent.
The Bill also proposes to set the duration of the upcoming valuation period to five years, commencing in 2026 and ending in 2030, with future valuation periods also lasting five years. This amendment seeks to provide certainty to property owners on their base LPT charges, while ensuring that properties continue to be revalued on a frequent basis. Revaluation will therefore next occur on 1 November 2030.
As part of the agreement by Government today, any additional yield from LPT as a result of these changes will be retained by local authorities. This will ensure that people will see the benefit of these changes in their local communities.
Other amendments to LPT
Deferral thresholds
In light of significant increases in the cost of living since November 2021, the income thresholds for a full or partial deferral of LPT payments will be increased. The 2019 Interdepartmental Review of LPT recommended that income thresholds for LPT deferrals be reviewed regularly with reference to the Consumer Price Index, wage growth in the economy and changes in fixed income payments by the State. The existing thresholds will be increased by 30 to 40 per cent. The income threshold for a full deferral for a single person will be increased from €18,000 to €25,000. For a couple, it will be increased from €30,000 to €40,000. The threshold for a partial deferral for a single person will be increased from €30,000 to €40,000. For a couple, it will be increased from €42,000 to €55,000.
Local Adjustment Factor
The Local Adjustment Factor, which allows local authorities to adjust the LPT collected in their areas on a percentage basis, will also be amended. For 2026 onwards, local authorities will have the option to vary LPT upwards by a maximum of 25 per cent. The maximum rate at which they may opt to decrease LPT will remain at 15 per cent. This change will give local authorities greater flexibility in respect of the LPT collected for their respective areas.
Exemption for properties damaged by defective concrete blocks
As part of the Bill, the LPT exemption for properties damaged by defective concrete blocks will be expanded. This will ensure that properties in Clare, Limerick and Sligo that are affected by defective concrete blocks will also become eligible for this time limited LPT exemption.
Mandatory use of Eircodes
Finally, the Bill will provide that, subject to a data protection impact assessment, Eircodes become a mandatory field in LPT returns. This would assist in eliminating errors like issuing written correspondence to the wrong property as a result of an identical or similar address.
Comparison of charge structure
The current and proposed LPT charge structure is as follows:
| Valuation bands and charges | Valuation bands and charges | |||
| 2022 – 2025 | 2026 – 2030 | |||
| Valuation band | LPT charge | Valuation band | LPT charge | |
| 1 | 0 – 200,000 | €90 | 1-240,000 | €95 |
| 2 | 200,001 – 262,500 | €225 | 240,001-315,000 | €235 |
| 3 | 262,501 – 350,000 | €315 | 315,001-420,000 | €333 |
| 4 | 350,001 – 437,500 | €405 | 420,001-525,000 | €428 |
| 5 | 437,501 – 525,000 | €495 | 525,001-630,000 | €523 |
| 6 | 525,001 – 612,500 | €585 | 630,001-735,000 | €618 |
| 7 | 612,501 – 700,000 | €675 | 735,001-840,000 | €713 |
| 8 | 700,001 – 787,500 | €765 | 840,001-945,000 | €808 |
| 9 | 787,501 – 875,000 | €855 | 945,001-1,050,000 | €903 |
| 10 | 875,001 – 962,500 | €945 | 1,050,001-1,155,000 | €998 |
| 11 | 962,501 – 1,050,000 | €1,035 | 1,115,001-1,260,001 | €1,094 |
| 12 | 1,050,001 – 1,137,500 | €1,189 | 1,260,001-1,365,001 | €1,272 |
| 13 | 1,137,501 – 1,225,000 | €1,408 | 1,365,001-1,470,001 | €1,535 |
| 14 | 1,225,001 – 1,312,500 | €1,627 | 1,470,001-1,575,001 | €1,797 |
| 15 | 1,312,501 – 1,400,000 | €1,846 | 1,575,001-1,680,001 | €2,060 |
| 16 | 1,400,001 – 1,487,500 | €2,064 | 1,680,001-1,785,001 | €2,322 |
| 17 | 1,487,501 – 1,575,000 | €2,283 | 1,785,001-1,890,001 | €2,585 |
| 18 | 1,575,001 – 1,662,500 | €2,502 | 1,890,001-1,995,001 | €2,847 |
| 19 | 1,662,501 – 1,750,000 | €2,721 | 1,995,001-2,100,000 | €3,110 |
Properties worth more than €2.1 million will be assessed on the actual value of the property rather than a valuation band.
The LPT charge for these properties is the total of:
- 0.0906 per cent of the first €1.26 million of market value of the property, plus:
- 0.25 per cent of the portion between €1.26 million and €2.1 million, plus:
- 0.3 per cent of the balance over €2.1 million
Illustrative examples
The below examples are illustrations of applying the above new bands and rates to non-representative properties in different geographical areas. They are not indicative of the typical property in the given area or of how much a house of similar value in 2021 will necessarily have appreciated in the interim. They do not take account of the Local Adjustment Factor as decided by local authorities.
A. House in Longford (Midlands Region)
Valued at €115,000 in 2021. Current estimated value €149,000.
Increase in value approx. 29 per cent
Remains in Band 1.
Liability increases from €90 to €95 (+€5)
B. House in Donegal (Border Region)
Valued at €210,000 in 2021. Current estimated value €279,000.
Increase in value approx. 33 per cent
Remains in Band 2.
Liability increases from €225 to €235 (+€10).
C. House in Cork (South-West Region)
Valued at €370,000 in 2021. Current estimated value €470,000.
Increase in value approx. 27 per cent
Remains in Band 4.
Liability increases from €405 to €428 (+€23).
D. House in Kildare (Mid-East Region)
Valued at €450,000 in 2021. Current estimated value €553,000.
Increase in value approx. 23 per cent
Remains in Band 5.
Liability increases from €495 to €523 (+€28).
E. High Value House in South Dublin
Valued at €1,250,000 in 2021, Current estimated value €1,562,500.
Increase in value approx. 25 per cent
Remains in Band 14.
Liability increases from €1,627 to €1,767 (+€140).
F. High Value House in Dun Laoghaire-Rathdown
Valued at €3,550,000 in 2021. Current estimated value €4,045,000.
Increase in value approx. 14 per cent
Continues to pay on self-assessed value.
Liability increases from €8,230 to €10,123 (+€1,902).