Budget 2027 – Rewarding Hard Work & Building Resilience

Presented as an optimistic but measured Budget, it sets out to reward hard work, risk-taking and innovation. Against a backdrop of continued uncertainty in energy and bond markets, it also aims to ease cost-of-living pressures, with measures on childcare, housing and energy costs. In his address to the Dáil, Minister Harris described the path set out as “an optimistic one”, adding “You don’t build resilience by being reckless. You do it by setting out a path that is ambitious, but achievable.”

As regards some of the specific taxation measures introduced in the Budget, a summary is as follows:

Personal Taxes

Standard Rate Cut-Off Point increased by €2,500 to €46,500 for single individuals, to €50,500 for those qualifying for the Single Person Child Carer Credit, and to €55,500 for married couples and civil partners, with a maximum increase of €37,500 for a second earner
Personal, Employee and Earned Income Tax Credits each increased by €125 to €2,125
Home Carer Tax Credit increased by €100 to €2,050
Ceiling of the 2% USC band increased by €1,600 to €30,300 from 1 January 2027, so that a full-time worker on the new minimum wage of €14.94 per hour remains outside the higher USC rates
Rent Tax Credit increased by €150 to €1,150 for single claimants and by €300 to €2,300 for jointly assessed couples, for the 2027 and 2028 tax years
Childcare Services Relief ceiling increased from €15,000 to €20,000, with the limit on the number of children who can be minded removed, subject to regulatory requirements
Exemption from income tax, USC and PRSI for microgeneration income increased from €400 to €600
Disregard for third-level fees tax relief reduced to align with the Student Contribution Fee, with 20% relief available on fees above that amount for second and subsequent students
Rebates under the Nurturing Skills Learner Fund made exempt from income tax, USC and PRSI
Revised age-related valuation factors to apply to defined benefit pensions under the Standard Fund Threshold from 1 January 2027

Savings and Investment

New Investment Account to be available from 1 July 2027 to Irish resident individuals aged 18 and over with a PPSN. It has a €50,000 tax-free threshold, a flat 1% tax on the value of the account above that threshold (based on the average daily value), and a €12,000 annual contribution limit. Only one account per person will be allowed at launch.
The account can hold shares, bonds, investment funds and insurance-based investment products, through MiFID-authorised firms, regulated fund managers and insurers. Deemed disposal will not apply, and providers will handle all tax reporting and payment.
Rates of Investment Undertaking Tax, Life Assurance Exit Tax, and tax on equivalent offshore funds and certain foreign life assurance policies reduced from 38% to 35% from 1 January 2027, with new rules to apply the 35% rate to Irish-domiciled ETFs held in clearing systems.

Capital Taxes

Standard rate of Capital Gains Tax reduced from 33% to 31% for disposals on or after 7 October 2026. The 33% rate on development land is unchanged.
CAT thresholds increased for gifts and inheritances taken on or after 7 October 2026: Group A to €420,000, Group B to €44,000 and Group C to €22,000.

Entrepreneurs and Business

Employer PRSI threshold increased from €552 to €600 per week for 2027, saving businesses between €650 and €700 per employee below the new threshold over a year
From 1 January 2027, employers reporting under the Enhanced Reporting Requirements can choose to report by the 14th of the following month instead of on or before the payment date
Employment Investment Incentive, Start-Up Capital Incentive, Start-Up Relief for Entrepreneurs and Angel Investor Relief to be extended in their current form, subject to the adoption of the new EU General Block Exemption Regulation, due to come into force on 1 January 2027
Section 486C start-up company relief extended by four years to 31 December 2030
Professional Services Withholding Tax to move from a flat 20% to personalised deduction rates, with an option for self-employed taxpayers to opt in to real-time information exchange with Revenue, subject to commencement order

Corporation Tax

R&D tax credit enhanced:
- Subcontracting limits increased to the higher of 20% of in-house qualifying expenditure or €200,000, from 15% or €100,000
- First-year payment threshold increased from €87,500 to €105,000
- New uplift allowing companies to increase their qualifying cost base by 5% of qualifying R&D wage costs, subject to the company incurring a sufficient level of R&D expenditure
- Improved recognition of the credit for preliminary tax purposes
- Regulated clinical trials can be used to satisfy the science test, to be provided for at Committee Stage of the Finance Bill
Knowledge Development Box extended to 1 January 2032, with a time-limited option for existing claimants to opt out
Preliminary corporation tax rules relaxed:
- Small company threshold increased from €200,000 to €350,000
- Extended top-up mechanism where at least 80% of the liability is paid by the final instalment date and the balance within four months of the year end
- Removal of the 45% deeming provision

VAT, Indirect Taxes and Climate Measures

Carbon tax on kerosene and natural gas reduced from €63.50 to €48.50 per tonne of CO2, and held at that level until 2030
Carbon tax increase on auto fuels due on 14 October 2026 deferred to 1 May 2027, with a further increase on 13 October 2027. Increases on marked gas oil and other fuels are also deferred.
Temporary reduced fuel excise rates maintained until 28 February 2027, with restoration in stages on 28 February, 8 April, 1 May and 30 June 2027
VRT relief for electric vehicles extended to 31 December 2028
Excise on a pack of 20 cigarettes increased by €1 (including VAT), with pro-rata increases on other tobacco products
New Pool Betting Charge of 25% on commissions earned, generally from 1 January 2027, with on-course pool bets exempt
Bank Levy extended for 2027, with a target yield of €200 million
VRT rate increase of 1% on existing rates for Category A vehicles (generally passenger cars) in bands 3 to 20 (cars with CO2 emissions of more than 80g/km and upwards), effective from 1 January 2027.
Excise duty on e-liquid products increasing by 20 cents per milliliter, exclusive of VAT, from 1 January 2027.

Housing Initiatives

Help to Buy maximum increased from €30,000 to €35,000 from 7 October 2026, with the other limits unchanged
Rent-a-Room relief threshold increased from €14,000 to €16,000 from 1 January 2027, with a single ceiling per taxpayer unit. The relief is extended to auxiliary dwellings installed after 27 July 2026 that fall within the 2026 planning exemptions.
Further opportunity for landowners to request a change in zoning and potentially be exempted from Residential Zoned Land Tax for 2027
New Derelict Property Tax at 7% of the self-assessed value of derelict residential and non-residential properties, to be legislated for in the Finance Bill:
- It will apply initially to towns of 4,000 or more people (107 towns), expanding to towns of 2,000 or more (171 towns) in year two
- Preliminary registers will be published on 1 September 2027, final registers on 1 March 2028, and the first pay-and-file deadline is 23 June 2028
Local authorities permitted to spend or borrow an additional €200 million per year

Agriculture

Succession Farm Partnership tax credit doubled from €5,000 to €10,000, and the three-year holding period removed, for partnerships and applications from 1 January 2027
50% accelerated capital allowances for farm safety equipment extended to 31 December 2029, with 12 additional items added
VAT on non-oral respiratory vaccines for livestock reduced from 23% to 9%
Farmers’ Flat Rate Addition increased to 4.8% for 2027

Charities, Culture and Heritage

VAT Compensation Scheme for Charities fund increased from €10 million to €15 million for 2027
Annual limit on tax relief for donating heritage items increased from €8 million to €12 million

In conclusion, with a surplus of €6.7 billion expected this year and €9.5 billion forecast for 2027, the Minister had room to deliver a meaningful income tax package after a year without one. The reduction in Capital Gains Tax, the R&D enhancements and the new Investment Account stand out as a clear signal of support for enterprise and long-term saving. At the same time, the Government has continued to set money aside, with an additional €1 billion going into the Future Ireland Fund. For businesses and individuals alike, the detail in Finance Bill 2026 will be key to understanding the practical impact of these changes in the months ahead. RBK will be covering the Finance Bill once it is released so make sure to stay tuned.

Disclaimer: While every effort has been made to ensure the accuracy of information within this publication is correct at the time of going to print, RBK do not accept any responsibility for any errors, omissions or misinformation whatsoever in this publication and shall have no liability whatsoever. The information contained in this publication is not intended to be an advice on any particular matter. No reader should act on the basis of any matter contained in this publication without appropriate professional advice.