Talks on Budget 2017 between senior Fine Gael members and the Independent Alliance have concluded.
Taoiseach Enda Kenny, Minister for Finance Michael Noonan and Minister for Public Expenditure and Reform Paschal Donohoe were finalising arrangements with their minority Government colleagues from the alliance.
Agreement has been reached on an 85% restoration of the Christmas bonus for Social Welfare recipients and a reduction in prescription charges.
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The charges are currently capped at €25 per month and the alliance wanted this reduced further.
A cap of €20 a month for those over 70 with a medical card was agreed.
It was earlier agreed that the old age pension will be increased by €5.
A thousand additional nurses, 800 extra gardaí and a new programme to recruit several hundred civilian staff for An Garda Síochána will also be announced.
The health budget will exceed €14bn next year.
Some of the measures include additional funds for homecare, and a €35m allocation of mental health initiatives with a €100m capital project expected to be announced in the mental health area tomorrow.
The National Treatment Purchase Fund is going to be allocated €20m and not the €15m previously agreed.
It has also been agreed to give medical cards for 10,000 children on the domiciliary care allowance.
In agriculture, €25m has been allocated for an animal welfare sheep grant and €5m will be provided in additional funding in the CLÁR programme for rural areas
Housing will receive increased funding to ensure 3,000 exits from emergency accommodation in 2017, and additional funding is being provided for Traveller accommodation.
As part of the tax package, three rates of USC will be reduced by half a percentage point and those on the minimum wage will be exempt from the higher rate, which will be 5%.
Under the first-time buyers’ refund scheme, a maximum refund of €20,000 will be allowed.
A rate of 5% will be applied to new builds up to €400,000.
It will be capped at €20,000 for new builds between €400,000 and €600,000.
The earned-income tax credit for the self-employed will be increased by €400 euro and there will be a drop of 2% in DIRT.
The inheritance tax threshold will increase to €310,000 for children and there will be other reductions for other relatives.
The home carer’s tax credit will go up by €100 and the VAT refund on home refurbishments is being extended by two years.
The tax credit for seafarers and a new averaging income tax scheme for farmers will be introduced if they have a bad year.
The price of cigarettes is set to increase by at least 30 cent.
The Minister for Finance earlier said he expected what he described as "rather small differences" between the Fianna Fáil view and the Government view on a number of Budget matters would be resolved today.
Mr Noonan said he expected the issues to be "resolved amicably today, and that the Budget would go through the Dáil tomorrow without any drama".
He said working in a partnership Government with independent ministers and relying on the support of the main Opposition party did bring challenges for this minority Government.
However, he said Fianna Fáil had been very responsible in its role so far and he was sure that would continue through the Budget.
Fianna Fáil finance spokesperson Michael McGrath earlier this evening said that while his party was still in contact with the Government about the details of Budget 2017, it would be unthinkable that there would not be a deal given that the stakes are so high.
In relation to the "squeezed middle", Mr Noonan said there will be quite significant increases on public expenditure, and there will be tax reductions for the lower paid and middle-income earners.
The big benefit, he said, will be improvements in services such as health, education, law and order on the streets, and childcare.
These are areas, he said, the "squeezed middle" are interested in as well, but that the big benefits will be on the expenditure rather than on the tax side.
Meanwhile, the Irish Senior Citizens' Parliament has said it would be retrograde of the Government if it decided not to increase the old age pension payment until March or April 2017.
Speaking on RTÉ's Today with Sean O’Rourke, Chief Executive Mairead Hayes said that the increase was an election promise and it was important that the Government paid it.
However she said that "all the good has been taken out of it now".
Age Action's head of advocacy said the increase was the first step in delivering a promise of a €25 increase in the State pension over the next five years.
Justin Moran said that for someone on a small fixed income, a €5 increase would make a big difference.
AAA-PBP proposes €25bn budget adjustments
AAA-PBP has launched its budget proposals with plans for €25 billion adjustments next year.
PBP is proposing to bring in €4bn by closing tax loopholes for corporations and increasing the corporation tax rates to 25% on profits over €800,000.
The group also plans to introduce a millionaires tax on assets over a million euro, introduce a financial transactions tax, a landlords' tax and a high income social charge.
It also proposes to abolish water charges, the property tax and the USC.
It proposes to reverse all the cuts to social welfare and introduce a universal state pension of €250.
AAA-PBP wants to increase social welfare rates by €16 a week to restore the basic payment rate of €204.
It also plans to abolish student contribution charges for third level and the immediate restoration of public sector pay to 2008 levels.
