The Government has confirmed the average water bill will be €240 per year.
It will give a free allowance of 30,000 litres per household per year, and an additional allowance to cover the cost of water for children aged under 18.
The proposed standing charge is abolished, while children in families are to get an extra allowance.
Charges will also be capped for people with higher water usage due to certain medical conditions.
Those who refuse to pay will see their water pressure turned down.
Minister Phil Hogan says there will be changes in the budget to assist vulnerable groups.
The Environment Minister said: "The regulator will finalise water charges in August but with these decisions, the conditions attached to the funding of Irish Water regarding the average annual water charge, and the fixing of charges to end of 2016, households now have high visibility in good time, as promised, of the likely level of charges."
Households will start to be billed for water usage in January next year.
There will be no standing charges, although holiday homes and other properties not permanently occupied may be forced to pay a minimum charge.
The tax will be fixed for the first year.
Official estimates suggest that average households in Ireland use 140,000 litres of water a year – based on 2.7 people living in the house.
The Government is also estimating that children use on average 38,000 litres a year.
The Commission for Energy Regulation will formally set the prices in August.