Budget 2027: the key message
Budget 2027 contains a number of changes that will affect individuals, families, employers, Business owners, farmers, investors and property owners. The main personal Tax measures include an increase in the income tax standard-rate band, higher tax credits and a small increase in the USC 2% band. There are also important changes to Capital Gains Tax (“CGT”), Capital Acquisitions Tax (“CAT”), investment taxation, R&D reliefs, farming measures, housing incentives and electric vehicle VRT relief.
The Budget also contains significant public spending commitments in areas such as social welfare, housing, childcare, education, health, infrastructure, energy and rural development.
Important: This newsletter summarises announced measures. Detailed rules may change or be clarified in the Finance Bill and subsequent legislation. Clients should not rely on a Budget announcement alone when making a transaction or Tax planning decision.
At a glance
| Area | Main Budget 2027 change |
| Income tax | Standard-rate cut-off point +€2,500; Personal, Employee and Earned Income Tax Credits +€125; Home Carer Credit +€100. |
| USC | 2% rate band ceiling increases from €28,700 to €30,300. |
| CAT | Group A threshold is increased by €20,000, Group B threshold by €4,000, and Group C threshold by €2,000. |
| CGT | Standard rate reduces from 33% to 31% From transactions on the 7th of October 2026. |
| Investment taxation | Investment Undertaking Tax, Life Assurance Exit Tax and certain offshore investment taxation reduce from 38% to 35%. |
| Housing | Rent Tax Credit increases; Rent-a-Room relief rises to €16,000; Help to Buy maximum rises to €35,000. |
| Business | R&D, KDB, start-up reliefs, EII/SCI/SURE and Angel Investor Relief are extended or enhanced. |
| Farming | Flat Rate Addition increases to 4.8%; farm safety ACA extended and expanded; succession farm partnership credit doubled. |
| Electric vehicles | EV VRT relief extended to 31 December 2028. |
| Minimum wage | National Minimum Wage increase announced for 2027; employers should review Payroll costs and contracts. |
1. Personal tax – more money stays with many taxpayers
The income tax standard-rate cut-off point for a single person will increase from €44,000 to €46,500. The corresponding bands for a single parent and for married couples or civil partners should be applied according to their assessment basis and, where both partners have income, the amount earned by the lower earner. The €2,500 increase can reduce income tax by up to €500 where the taxpayer has enough income otherwise taxable at 40%.
| Measure | 2026 | 2027 | Change |
| Income tax standard-rate cut-off point | €44,000 | €46,500 | +€2,500 |
| Personal Tax Credit | €2,000 | €2,125 | +€125 |
| Married couple’s personal tax credit | €4,000 | €4,250 | +€250 |
| Employee Tax Credit | €2,000 | €2,125 | +€125 |
| Earned Income Credit | €2,000 | €2,125 | +€125 |
| Home Carer Tax Credit | €1,950 | €2,050 | +€100 |
| USC 2% rate ceiling | €28,700 | €30,300 | +€1,600 |
What does this mean in practice?
For a single PAYE employee with straightforward circumstances and sufficient income to use the changes in full, the announced measures can reduce 2027 income tax and USC by up to approximately €766 over a full year. This comprises €250 from the increases in the Personal and Employee Tax Credits, up to €500 from the €2,500 widening of the 20% income tax band, and up to €16 from the USC band change. The actual saving may be lower where income is below the revised tax band, credits are not fully used or other personal circumstances apply.
| Illustrative gross income | Illustrative 2027 income-tax saving | Comment |
| €30,300 | Approximately €250 | Main benefit comes from the €125 increase in each of the Personal and Employee Tax Credits. |
| €50,000 | Approximately €750 | The wider standard-rate band becomes particularly valuable at this income level, in addition to higher credits. |
These figures are illustrations only and exclude PRSI and other personal circumstances. At gross income of €30,300, the income-tax saving is approximately €250, with a further USC saving of approximately €16. At gross income of €50,000, the income-tax saving is approximately €750 and the USC saving is approximately €16, giving a combined illustrative saving of about €766. These figures should not be used as Payroll calculations without checking the individual’s full tax position.
Single parents and married couples
The increased Personal Tax Credit applies to qualifying taxpayers generally. The Employee Tax Credit applies to qualifying employees, while the Earned Income Credit is relevant to qualifying non-PAYE earned income. The Home Carer Tax Credit increases from €1,950 to €2,050 and is relevant to qualifying jointly assessed couples where one spouse or civil partner cares for a dependent person. The actual saving for a single parent or married couple will depend on how income is earned, how the couple is assessed and which credits already apply.
2. Capital Taxes
CGT – an important change for disposals
The standard rate of CGT is reduced from 33% to 31%, which marks the first downward adjustment to the rate since 2012. The change comes into effect for contracts signed on or after 7 October 2026, which is beneficial for persons looking to make chargeable disposals before the end of the calendar year. This is a welcome change and has been heavily lobbied for in recent years.
Capital Acquisition Tax
The Minister announced a further extension to the tax-free group threshold with the following increases applying to gifts and inheritances taken on or after 7 October 2026.
- Group A to €420,000 (up from €400,000)
- Group B to €44,000 (up from €40,000)
- Group C to €22,000 (up from €20,000)
The increase in the tax-free thresholds are very welcome, however the Minister did not reduce the rate of CAT to match the CGT rate deduction to 31%. The tax rate will remain at 33% and is the first time since the turn of the century that the CGT and CAT rates have not been aligned.
3. Investment and savings taxation
Budget 2027 reduces the tax rate applying to several investment products from 38% to 35%, including Investment Undertakings Tax, Life Assurance Exit Tax and equivalent taxation applying to certain offshore funds and certain foreign life assurance policies.
While discussed in board terms in recent weeks the Minister made further announcement on the new Investment Account framework which is due commence on 1 July 2027. The scheme will be open to everyone with no minimum contribution level, however an upper contribution level of €12,000 per year has been set. The first €50,000 of the account value will be tax-free. A flat tax of 1% per year will apply only to the value above €50,000. For example, if an account is valued at €52,000, the first €50,000 is tax-free and the 1% charge applies to the €2,000 excess, giving an annual tax charge of €20. The detailed operation of the account will be set out in legislation and further guidance.
4. Housing and property
| Measure | 2026 / current position | 2027 / announced position |
| Rent-a-Room Relief | €14,000 income ceiling | €16,000 income ceiling |
| Rent Tax Credit – individual | Current credit €1,000 | +€150 |
| Rent Tax Credit – jointly assessed unit | Current credit €2,000 | +€300 |
| Help to Buy | €30,000 maximum | €35,000 maximum |
| Designated Auxiliary Dwellings | Not covered by the existing Rent-a-Room relief | Rent-a-Room relief extended to certain garden/auxiliary/modular dwellings installed after 27 July 2026. |
The Rent-a-Room Relief ceiling increases from €14,000 to €16,000. This allows up to €2,000 of additional qualifying gross rental income to fall within the relief, but exceeding the ceiling can cause all of the relevant income—not merely the excess—to become taxable. The Rent Tax Credit increases to €1,150 for an individual and €2,300 for a jointly assessed couple, while the maximum Help to Buy refund increases from €30,000 to €35,000. Each measure remains subject to its own eligibility conditions.
The Residential Zoned Land Tax measures are also amended to give landowners a further opportunity to request a change in zoning. This is an important area for landowners affected by residential zoning.
5. Business tax – key measures for companies and entrepreneurs
There are several measures aimed at supporting investment, innovation, entrepreneurship and business growth. Some are extensions of existing reliefs rather than completely new schemes.
| Measure | Budget 2027 change |
| R&D Tax Credit | Regime enhanced, including changes relating to subcontracting and first-year payment arrangements. |
| Knowledge Development Box (KDB) | Extended to 1 January 2032, with a time-limited opt-out provision. |
| Section 486C start-up relief | Extended to 31 December 2030. |
| EII / SCI / SURE | Existing investment and entrepreneurship reliefs extended. |
| Angel Investor Relief | Relief extended. |
| Corporation Tax preliminary tax threshold | A review of the existing preliminary tax threshold was announced in the Ministerial speech, however the detail of any proposed changes will be set out in the forthcoming Finance Act. |
| Professional Services Withholding Tax (PSWT) | The Minister committed to review the current PSWT regime and to engage with Stakeholder |
A note for companies
The Budget does not change the corporation tax rate in the measures summarised here. However, the R&D, KDB and start-up measures can be important for companies investing in innovation or developing new products and services. The above tax reliefs are continually evolving and being enhanced to support Irish business and future proof our economy. While this can be a complex area of tax legislation, start-ups and companies seeking to expand should consider if they can avail of these schemes. Please reach out to BCA if you need to consider these schemes.
6. Farming and agriculture
| Measure | Budget 2027 change |
| Farmer’s Flat Rate Addition | Increases from 4.5% in 2026 to 4.8% in 2027. The rate had been reduced from 5.1% to 4.5% in Budget 2026, so the 2027 increase represents a partial reversal of that earlier reduction. |
| Farm Safety Accelerated Capital Allowance | Extended to 31 December 2029 and expanded to include 12 additional items. |
| Succession Farm Partnerships | Tax credit doubled to €10,000 and the three-year holding requirement removed. |
| Livestock respiratory vaccines | VAT on non-oral respiratory vaccines reduced to 9%. |
| Other agriculture | Further public spending includes a new €31m Fertiliser Scheme. |
Farmers considering investment, succession or restructuring should review these measures alongside their wider income tax, CGT, CAT and capital allowance position. The Minister made no references to changes to tax reliefs that supports lands transfers, however such changes are normally announced in the Finance Act which follows later in the month.
7. Employers and payroll – National Minimum Wage
The Ministerial Budget announcement includes an increase in the National Minimum Wage for 2027. For employers, the effect is not limited to the hourly wage: payroll costs, employer PRSI, overtime, holiday pay and other employment-related costs should also be reviewed.
The National Minimum Wage will increase from €14.15 to €14.94 per hour from 1 January 2027. This is an increase of €0.79 per hour. For an employee working 39 hours each week, it represents approximately €30.81 more gross pay per week, or €1,602 more over a full year, before tax. The employer’s total additional cost will be higher once employer PRSI and related pay costs are included.
To help employers manage the minimum-wage increase, the weekly earnings threshold for the lower rate of Class A employer PRSI will increase from €552 to €600 in 2027. This means that an employee earning no more than €600 per week can remain within the lower employer PRSI rate rather than moving to the higher rate solely because of the wage increase. The Government estimates that this change could reduce employer PRSI costs by approximately €650 to €700 per qualifying employee over a full year. The saving will depend on the employee’s actual weekly pay and the applicable PRSI class and rates.
Businesses with employees close to the minimum wage should prepare updated payroll budgets for 2027 and review whether pay rates elsewhere in the organisation need adjustment.
8. Electric vehicles, motoring and carbon tax
| Measure | Budget 2027 position |
| EV VRT relief | Extended to 31 December 2028. |
| VRT Category A | Rates increase by 1% in bands 3 to 20 (>80 WLTP CO2 emissions). |
| Home heating oil and natural gas carbon tax | Reduced to €48.50 per tonne of CO₂ and maintained at this rate for the lifetime of the Government. |
| Petrol and diesel carbon tax | Remain at €71 per tonne until 1 May 2027, then increase to €78.50 per tonne. |
| Microgeneration electricity exemption | Increases from €400 to €600. |
The Budget in Brief estimates that the carbon-tax changes will increase the cost of a typical 60-litre petrol or diesel fill by approximately €1.28/€1.48, while reducing the annual carbon-tax cost associated with typical household gas and kerosene use.
The reduction from €63.50 to €48.50 per tonne of CO₂ equates to an estimated saving of approximately €43.60 on 1,000 litres of kerosene and approximately €32.50 on 11,000 kWh of natural gas, inclusive of the applicable VAT.
9. Families, childcare and social welfare
Under the announced childcare measure, the maximum monthly fee falls from €735 to €550, a reduction of €185 per month, from September 2027 for qualifying children up to senior infants. A family paying the maximum fee for a full 12 months could save up to €2,220 on an annualised basis, but the saving in 2027 will be lower because the revised cap is not due to begin until September. The actual saving will depend on the provider and the child’s attendance pattern and eligibility.
| Area | Budget 2027 announcement |
| Weekly social welfare payments | Increase of €10 per week, benefiting approximately 1.6 million people. |
| Cost of Disability payment | New €500 payment for approximately 238,000 people. |
| Fuel Allowance | Increase of €5 per week. |
| Child support | Increase of €6 per week for eligible children. |
| Working Family Payment | Income thresholds increase by €30 per week. |
| Living Alone Allowance | Increase of €3 per week. |
| Childcare | Maximum monthly fee falls from €735 to €550, with potential savings of up to €2,220 per year for families. |
| Childcare Services Relief | Income ceiling rises from €15,000 to €20,000 and the cap on the number of children minded is removed. |
For a single person aged 66 or over, the weekly income threshold for Fuel Allowance will increase from €534 to €641. This is separate from the €5 increase in the weekly Fuel Allowance rate and may bring additional pensioners within the means test. Eligibility will continue to depend on the applicant’s household and income circumstances.
Although the State Pension and other weekly social welfare payments are increasing, the age-related Income Tax exemption limits have not increased. They remain at €18,000 for a single, widowed or surviving civil partner aged 65 or over and €36,000 for a married couple or civil partners who are jointly assessed where either person is aged 65 or over. The limits may be higher where there are dependent children. As a result, other income may be taxable where total income exceeds the relevant exemption limit, although marginal relief may apply. These limits relate to Income Tax only; USC and PRSI are considered separately.
10. Education, health and public services
Budget 2027 also provides substantial additional public expenditure. For clients and families, the following measures are particularly relevant:
| Area | Selected Budget 2027 commitment |
| Education | 1,353 additional teachers and 2,339 additional SNAs. |
| Schools | €2m DEIS Plus; school transport funding for approximately 180,000 children. |
| Higher education | €150 permanent reduction in the student contribution; 1,420 additional higher-education places in health and social care professions. |
| Health / home support | 1.8m additional Home Support hours. |
| Disability | 191,000 additional hours and 930 additional disability staff. |
| Housing | €3bn social housing allocation, including 11,250 new social homes. |
| Starter homes | More than €1bn for the Starter Homes programme and 8,500 homes through affordability schemes. |
11. Infrastructure, energy and rural investment
| Area | Selected Budget 2027 commitment |
| Infrastructure | Government commitment of €275.4bn over ten years, including €102.4bn over the next five years. |
| Home energy upgrades | €654.5m for home energy upgrades, including enhanced retrofit and solar supports. |
| Transport | €6bn resource allocation for MetroLink over 2027–2030 and continued public transport investment. |
| Rural development | €208m for rural development. |
| Sport | €4 million in funding to the League of Ireland football academies.€1 million increase in funding to the Gaelic Players Association (GPA) to support intercounty players.€1 million is ring-fenced for the hurling and camogie academy initiative.Additional support is provided for high-performance in the build up to the LA OlympicsAlmost €22 million will support Ireland’s hosting of the 2027 Ryder Cup and preparations for the 2028 European Football Championship. |
| Enterprise | €3m for Startup Ireland through Enterprise Ireland. |
12. Other tax measures – small changes worth knowing
A number of smaller measures may still be relevant to particular clients:
| Measure | Change |
| Third-level fees | Tax-relief threshold for qualifying tuition fees is reduced to align with the Student Contribution Fee. |
| Nurturing Skills Learner Fund | Rebates exempt from Income Tax, USC and PRSI. |
| Standard Fund Threshold | Current age-related valuation factors revised. |
| Charity VAT Compensation Scheme | Annual capped fund increased to €15m. |
| Heritage items | Ceiling for donation of heritage items increased by €4m. |
| Tobacco | Excise increases by €1 on a pack of 20 cigarettes, with pro-rata increases on other tobacco products. |
| E-liquids | Products Tax increases by €0.20 per ml. |
| Pool betting | New pool-betting charge introduced. |
| Bank Levy | Extended to 2027. |
| Mineral Oil Tax | Temporary non-carbon component reduction extended. |