It is anticipated the rise – which comes into effect at midnight – will bring in €61.4m to be spent on health initiatives.
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Critics have depicted it as an attempt to soften the electorate.
Young families and pensioners in particular were targeted with a series of measures putting cash back in their pockets.
The Department of Finance has forecast that the country will balance the books in headline terms in 2018, he said.
Michael Noonan, Ireland’s finance minister, delivered a budget on Tuesday which was notable for slight concessions on austerity, ahead of an expected election.
There certainly won’t be any scary surprises for retailers and customers alike this Halloween with the official introduction of the doubling of the max single contactless payment to €30 commencing on 31 October.
Plans have also been announced today to extend free GP care to all children under 12, subject to negotiations with the Irish Medical Organisation.
There will be a €2.50increase in the fuel allowance, a restoration of the Christmas bonus by 75% and the old age pension will rise by €3 per week.
Dublin has moved in recent years to tighten its corporate tax rules in the wake of prolonged worldwide criticism.
Revaluations of homes for the Local Property Tax (LPT) is to be postponed from 2016 to 2019.
But there are no increases in the duty on alcohol, petrol and diesel.
The current 7% rate of USC, on incomes between €17,577 and €70,044, will be reduced by at least 1.5% – there are also likely to be changes to the lower USC rates.
The Respite Care grant is to be restored to €1,700.
Commercial motor tax rates are to be simplified, with the 20 existing rates to be replaced by five new rates, ranging from €92 to €900.
Meanwhile, Capital Gains Tax for small businesses owners will fall from 33% to 20% on sales of businesses up to €1m. Income tax credit of €5000 will be allocated to farm partnership. How will farmers benefit?
Unemployment is expected to drop to 8% next year, with a drop to just 6.25% by 2021.
An additional 600 gardai will be recruited, while the 12.5% corporation tax rate is to remain in place.
Fianna Fail’s finance spokesman Michael McGrath claimed the Government was targeting the better off for a payback.
With less than six months to the Republic’s next general election, Budget 2016 was clearly created to win votes for the Fine Gael/Labour coalition.
“This is not the future that the women and men of 1916 envisioned for their country”, he said.
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Mr Noonan said the Budget package includes €750 million in revenue relieving measures in 2016.
