Budget 2025: What it gives to workers, pensioners and families – Measures for property and investment

With one hand, the 2025 state budget “gives” €1.1 billion for new benefits, tax breaks, and measures to support the economy. However, with the other, it “takes,” as rising incomes lead to a corresponding increase in tax revenues. The government estimates that in 2025, the state will collect an additional €2.5 billion in taxes, thus paving the way for new benefits while simultaneously strengthening the country’s fiscal position.

In 2024, benefits and support measures amounted to €1.84 billion, while for 2025, an increase of €1.1 billion is projected, bringing the total cost to €2.944 billion. These measures include pension increases of up to 2.4% and a boost to the minimum wage, aiming to reduce unemployment to below 10%.

Additionally, new salary increases for public sector employees are planned, with the entry-level salary expected to reach €950 by 2027 and anticipated to rise to €870 in 2025.

These measures are accompanied, however, by higher taxes due to rising incomes and increased private consumption, which in turn generates greater tax revenue. Tax revenues in 2024 exceeded expectations by €3.7 billion, mainly due to wage increases, reduced tax evasion, and a rise in electronic transactions.

This revenue increase is primarily attributed to wage hikes, reduced tax evasion, and the expansion of electronic payments. Income tax revenues from individuals exceeded forecasts by €1.026 billion, primarily due to higher earnings, while corporate income taxes surpassed expectations by €1.15 billion. VAT also brought in an additional €1.24 billion, driven by higher consumption and reduced tax evasion.

For 2025, further growth in tax revenue is expected, projected to reach €69.2 billion, an increase of €2.47 billion compared to 2024. Direct income taxes are estimated to contribute €24.9 billion, while indirect taxes, including VAT, are forecast to generate €37.8 billion.

The 2025 budget also includes significant fiscal interventions, such as a one-percentage-point reduction in social security contributions, estimated to cost €440 million, and the complete abolition of the business levy for freelancers, costing €238 million. Additionally, the refund of excise duty on agricultural fuel will be made permanent, while pensions will increase based on changes in inflation and GDP, with a total cost of €401 million for 2025.

There are also plans to strengthen public sector wages through a reform of the salary scale initiated in 2024 and further basic salary increases starting in April 2025. At the same time, the income of NHS doctors will be enhanced, and compensation for uniformed personnel will also be increased.

In December 2024, extraordinary benefits amounting to €243 million will be distributed to 1.9 million beneficiaries, including pensioners with a personal difference, child benefit recipients, uninsured elderly, and minimum guaranteed income recipients. Meanwhile, the minimum wage, which rose by 27.7% between 2021 and 2024, will be further adjusted in 2025, and seniority increments in the private sector have been “unfrozen.”

Income Support for Workers and Pensioners

The key permanent measures aimed at income support, starting from 2024 or 2025, include:

• Reduction of Social Security Contributions: From 01.01.2025, a 1% reduction, split into 0.5% for employees and 0.5% for employer health contributions, with an annual cost of €440 million.
• Abolition of Business Tax: From 01.01.2025, following a 50% reduction in 2024, with a cost of €238 million for 2025.
• Refund of Excise Duty on Agricultural Diesel: Extension for 2024 and permanent implementation from 2025, with an annual cost of €100 million.
• Pension Increases: Based on inflation and growth, costing €424 million for 2024 and €398 million for 2025.
• Public Sector Salary Reform: From 01.01.2024, increases for all public servants, with emphasis on low-wage earners, parents, and managers.

Total Cost: €1.067 billion, with an additional increase of €143 million in 2025.

Additionally, €243 million will be allocated in 2024 for support to 1.9 million beneficiaries, including pensioners, parents, and individuals with disabilities.

Support for Families

To address demographic challenges, the following measures are planned:

• Increase in Birth Grant: From €2,400–€3,500, retroactively effective from 01.01.2023.
• Extension of Maternity Allowance: For freelancers and farmers, extended from 4 to 9 months.
• Increase in Tax-Free Allowance: By €1,000 for taxpayers with children.
• Abolition of Health Insurance Tax for Children: Up to 18 years old, starting in 2025.

These measures are part of a broader national action plan, alongside programs like “Neighborhood Nannies” and childcare vouchers for daycare centers.

Incentives for Investments

The government is implementing significant measures to enhance investments, including:

• Expanded Tax Deductions: Increased from 200% to up to 315% for R&D expenses in SMEs focused on knowledge-intensive activities.
• Tax Incentives for Patent Exploitation: Extending the years of tax exemption on profits related to patents.
• Enhanced Incentives for Angel Investors: Raising the capital limit to €900,000 for contributions to startups.
• Lower Capital Requirement for Tax Benefits: Reducing the minimum corporate capital for mergers to €100,000, enabling 30% tax relief on profits.
• Carry-Forward of Tax Losses: For businesses undergoing mergers or transformations.

Developmental Interventions

The government is promoting investment and innovation with measures such as:

• Golden Visa for Startups: For investments starting at €250,000.
• Abolition of Fixed Telephony Charges: For high-speed internet connections.
• Establishment of a National Investment Fund (Growthfund): With initial capital of €300 million.

Additionally, a cruise tourism fee of €52 million annually will be allocated to improve port infrastructure, enhance tourism products, and support local communities.

Measures for Property Owners and Home Seekers

The 2025 budget incorporates housing policy interventions with clear goals: encouraging home purchases, unlocking and renting over 700,000 vacant homes, and discouraging short-term rentals.

Key measures include:

• New “My Home II” Program: Total budget of €2 billion (€1 billion from loans under TAA and €1 billion from commercial banks). The interest rate will be 50% lower than the current commercial rate, with the TAA-financed portion being interest-free. Expanded age (25-50) and income criteria (€10,000–€20,000 for singles, €28,000 for couples plus €4,000 per child).
• Energy Upgrade Program: €400 million via TAA loans for old home energy upgrades, with zero interest.
• Tax Exemption on Rental Income: For three years on properties up to 120 sqm rented long-term after being vacant or used for short-term leases for at least three years. Estimated cost: €3 million in 2025, €13 million annually for 2026–2028.
• Housing Allowance Increase: From €70 to €125 (or €75 depending on income brackets), with a 30% increase per child and targeted asset criteria.
• Ban on New Short-Term Rentals: For apartments in Athens’ 1st, 2nd, and 3rd municipal districts during 2025, due to high rates of short-term rentals in these areas.
• Increased Climate Resilience Fee: For short-term rentals, raised from €0.50 to €2 per night in winter and from €1.50 to €8 per night in summer.
• Doubled Subsidy for “Renovate and Rent” Program: From €4,000 to €8,000, covering 60% (up from 40%) of costs. Budget: €50 million (€25 million annually for 2024–2025).
• Extension of VAT Suspension: On new constructions until the end of 2025, with an annual cost of €18 million.
• Public Property Utilization: Through competitive processes under the “Social Exchange” program, with private developers required to lease properties while covering costs.

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