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Irish Government Extends 9% VAT Rate on Electricity and Gas

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Households to Benefit from Continued Relief on Energy Costs

The Irish Government has announced a further six-month extension of the reduced 9% VAT rate on electricity and gas bills, providing continued relief for households grappling with ongoing energy costs. The reduced rate, which was initially introduced as a temporary measure in 2022, will now remain in place until 31 October 2025.

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This move forms part of the Government’s wider efforts to mitigate the impact of energy inflation and ease cost-of-living pressures on Irish consumers.

Extension of Reduced VAT on Energy Bills

The VAT rate on electricity and gas was cut from 13.5% to 9% in May 2022 as energy prices spiked across Europe. Initially intended as a short-term response, the measure has now been extended multiple times as global energy markets remain volatile.

Minister for Housing Darragh O’Brien welcomed the decision, saying it is a practical step to support households, particularly during the transition out of the winter heating season.

What It Means for Households

The Department of Finance has estimated the extended VAT reduction will result in:

  • An average saving of €26.60 per household on electricity bills
  • An average saving of €20.28 per household on gas bills

These figures apply over the course of the six-month extension, covering the period from 1 May to 31 October 2025.

Future Reassessment

The Government has indicated that it will re-evaluate the VAT rate policy before the end of October, with a view to either extending the reduced rate further or phasing it out if energy market conditions stabilise.

Minister O’Brien added:

“We will continue to monitor the situation closely and ensure any decisions reflect the financial realities Irish families are facing.”

Wider Context: Energy Affordability and Market Pressures

Although energy prices have eased slightly compared to their 2022 peaks, many Irish households continue to face high electricity and gas bills, especially those on variable rate plans or using prepay meters.

The Government has also introduced Energy Credit Schemes, fuel allowances, and other supports as part of its wider response to the cost-of-living crisis.

This VAT extension represents a continued attempt to cushion the impact of energy inflation, though longer-term solutions such as energy market reform, increased domestic renewable energy production, and better consumer protections remain high on the political agenda.

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Final Word

The extension of the 9% VAT rate on electricity and gas will come as welcome news to households already feeling the squeeze from high utility bills. While modest in monetary value, the move signals the Government’s commitment to providing ongoing relief as the cost-of-living crisis continues to affect families nationwide.

Further reviews of VAT rates and other energy-related supports are expected before the October deadline.

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