Ireland Budget 2027: Key Tax and Spending Highlights

On 6 October 2026, the Tánaiste and Minister for Finance, Simon Harris T.D., and the Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, Jack Chambers T.D. (the "Ministers"), delivered Budget 2027.

As signalled in the Summer Economic Statement, the Ministers announced a total budgetary package of €8.65 billion. This comprises €7 billion in public expenditure measures and €1.65 billion in tax measures.

Despite this package, the public finances are expected to remain in surplus, with a projected surplus of €6.7 billion in 2026 and €9.5 billion in 2027. These figures account for capital investment of €20.3 billion next year, which is €1.1 billion more than this year. The Ministers also announced a new Public Spending Efficiency Taskforce, which will scrutinize day-to-day public spending. On the economic outlook, the Department of Finance forecasts that a further 53,000 jobs will be created in 2027.

Below is a brief overview of the key highlights of Budget 2027 as announced today. The finer details of these measures, along with any additional policy and legislative changes, will become clearer when the Finance Bill is published in the coming week.

Please note that a number of these measures are subject to EU State Aid considerations.

Tax Highlights

Income Tax

• The national minimum wage will increase by €0.79 per hour, from €14.15 to €14.94 per hour, effective from 1 January 2027.
• The entry threshold for the 3% USC rate will be increased from €28,700 to €30,300 to ensure that minimum wage earners do not fall within the higher USC band.
• The entry point to the higher 40% income tax rate (the standard rate band) is to increase to €46,500 for a single person and €55,500 for a single earning married couple. Cumulatively, the income tax changes mean that a single person earning €50,000 will benefit by €750, and a couple with a joint income of €100,000 will benefit by €1,500.
• The Personal Tax Credit, PAYE Tax Credit and Earned Income Tax Credit are each to increase by €125 to €2,125. The Home Carer Tax Credit will increase by €100 to €2,025.
• The employer PRSI threshold will increase from €552 to €600 per week for 2027.

Corporation Tax

• There will be an increase in subcontracting limits for R&D activities with third-level institutions and third parties.
• The first-year R&D tax credit payment threshold will increase from €87,500 to €105,000, providing improved cashflow support for smaller projects.
• A new enhancement in respect of qualifying R&D wage costs will also be introduced.
• The Knowledge Development Box will be extended to 1 January 2032 with a time limited option to opt out of the regime.
• The Finance Bill will implement the OECD Pillar Two Side-by-Side Package agreed in January 2026 which the Ministers said will provide certainty to the business community and avoid further fragmentation of the international tax architecture.
• New Pillar Two safe harbours, including the Side-by-Side Safe Harbour and Ultimate Parent Entity Safe Harbour, aimed at reducing compliance obligations for eligible multinational groups will also be introduced.
• No changes will be made to the operation of Ireland's Qualified Domestic Minimum Top-up Tax under the Side-by-Side Safe Harbour.

Housing & Property

• A total of €9.4 billion has been allocated to the Department of Housing, with €2.2 billion going towards supporting the "social housing needs of 110,000 households" through various schemes, as well as investment in emergency supports for those facing homelessness.
• Over €1 billion will be allocated under the Starter Homes Programme to operate alongside the Help-to-Buy Initiative.
• The maximum available to first-time buyers under the Help-to-Buy Scheme is to increase from €30,000 to €35,000. The scheme provides a tax refund of up to 10% of the purchase price of a new or self-build home.
• The Rent Tax Credit is to increase by €150 for single claimants and €300 for couples, to €1,150 and €2,300 respectively.
• The Rent-a-Room tax free threshold is increasing from €14,000 to €16,000. The relief will apply from 27 July 2026 when the new planning rules came into force.
• Derelict property tax legislation will be included in the Finance Bill with a proposed rate of tax of 7%.
• Amendments will be made to Residential Zoned Land Tax to provide a further opportunity for landowners to request a change in the zoning of land.

Energy & Climate

• Cuts in excise duty on petrol and diesel are to be extended through the winter, with the return to normal rates (previously due in November) pushed out to 1 March 2027. This is in addition to the extension of both the reduced NORA levy, a charge collected on the sale of petroleum products in Ireland, and the enhanced Diesel Rebate Scheme until 31 December 2026.
• The Vehicle Registration Tax relief scheme for electric vehicles is extended for two years until 31 December 2028.
• Vehicle Registration Tax on "more pollutant cars" in bands 3 to 20 is to increase by 1%.
• Carbon Tax on home heating oil and natural gas will be reduced to €48 per tonne of CO2, down from €63.50 per tonne.
• The weekly Fuel Allowance rate will increase by €5, and the Fuel Allowance income threshold for single pensioners will increase from €534 to €641 per week.
• A record capital allocation of €654.5 million is being granted for SEAI residential and community energy upgrade schemes. In total, €1.3 billion is allocated to the Department of Climate, Energy and the Environment in 2027.
• A total of €170 million will be allocated to climate action and the environment, including €25 million for the EU Just Transition programme in the Midlands.
• A further €155 million will be used to develop the circular economy, including €47 million to tackle waste contamination sites.
• The income tax exemption for microgeneration income received by households who sell electricity back to the grid will increase by €200, from €400 to €600.
• There will be an allocation of €2.3 billion to Uisce Éireann next year, which includes €1.5 billion in capital funding to increase the resilience and sustainability of supply as well as funding new water and wastewater connections.

VAT

• The total annual capped fund for charities, which entitles charities to claim a refund of a proportion of their VAT costs, will increase from €10 million to €15 million.
• The VAT rate on the supply of respiratory vaccines for livestock will be reduced to 9%.

Capital & Savings

• The three Capital Acquisitions Tax thresholds are to increase as follows:
  • Category A threshold to increase from €400,000 to €420,000;
  • Category B threshold to increase from €40,000 to €44,000; and
  • Category C threshold to increase from €20,000 to €22,000.
• The standard rate of Capital Gains Tax will reduce from 33% to 31%.
• A change in Revenue reporting requirements will also be introduced. Employers will be able to decide whether to report in real time or make monthly returns.
• The rate of investment undertaking tax and life assurance exit tax (including on application of the eight-year deemed disposal rule) is to be cut from 38% to 35%. The applicable rates applying to equivalent offshore funds and certain foreign life assurance policies are also being reduced by the same percentage.
• The new Irish Investment Account, which will open on 1 July 2027, will have a tax-free threshold of €50,000 with a maximum contribution of €12,000 per annum. These accounts will be exempt from capital gains tax, dividend withholding tax, investment undertaking tax and life assurance exit tax. Instead, a flat annual tax of 1% will be levied on the portion of the account value that exceeds €50,000.
• Ireland Strategic Investment Fund is launching a €1 billion investment programme which will run for three years.
• The following reliefs have all been extended: the Angel Investor Relief scheme, Start-Up Relief for Entrepreneurs, the Employment Investment Incentive, and the Start-Up Capital Incentive.
• An additional €1 billion will be invested in the Future Ireland Fund in 2027. This comes on top of the planned transfer of €4.8 billion, further strengthening the State's long-term savings position.

Social Welfare, Childcare & Education

• A total of €30.9 billion has been allocated to the Department of Social Protection, an increase of €2 billion on this year. The State pension and core weekly social welfare rates will increase by €10 per week.
• A new €500 cost of disability payment will be introduced, payable as a lump sum in January 2027, benefiting almost 240,000 people currently in receipt of long-term disability payments.
• The maximum childcare fees paid by parents will decrease from €735 to €550 per month for children up to senior infants, saving parents €2,220 per child per year. The Department of Children, Disability and Equality has been allocated €7.6 billion in total.
• There will be a permanent €150 reduction in student contribution fees, enhanced and new student fee grants for families with more than one child in higher education, and a 4.5% increase in SUSI maintenance grants from January 2027.

Transport

• A total of €5.5 billion is allocated to the Department of Transport, covering the launch of the Vehicle Adaptation Scheme for people with mobility needs and support for regional airport connectivity.
• A total of €6 billion is being allocated to MetroLink over the period from 2027 to 2030.
• Through the National Development Plan, €4.2 billion will be provided for investment in DART+, Cork commuter rail projects, BusConnects and other road projects such as the Adare Bypass, the Galway Ring Road and the M28 road from Cork to Ringaskiddy.
• The Road Transport Support Scheme will be extended for 2 months this year, costing €73 million.

Farming & Agriculture

• The three-year holding period for applications to succession farm partnerships will be removed, and the associated tax credit will be increased from €5,000 to €10,000.
• The wear and tear allowance for farm safety equipment has also been extended by three years until the end of 2029, while 12 items have been added to the list of equipment covered.
• The farmer's flat rate addition is being increased from 4.5% to 4.8% in 2027.
• The Fuel Income Support Scheme for farmers and agricultural contractors, and related horticulture and fisheries schemes, are being extended for a further five months this year at a cost of €31.2 million.

Miscellaneous

• Excise duty has been increased by €1 on a packet of 20 cigarettes, with a pro-rata increase applied to other tobacco products. A new rate of 20 cents per millilitre will also apply to e-liquid products.
• A €15 million support scheme for rural pubs is to be introduced. The package will include a tax rebate scheme for draught beer kegs, aimed at easing cost pressures on smaller rural licensed premises.
• The Bank Levy has been extended for a further year, with a target yield of €200 million, so the banking sector will continue to contribute to the Exchequer.
• The annual threshold for tax relief on donations of heritage items to Irish national collections will increase from €8 million to €12 million. This is intended to encourage more significant items to be donated to the State.
• A pool betting charge will be introduced in the Finance Bill.

We will await further details regarding the above changes, as well as any measures not announced in today's Budget speech. However, should you have any queries in relation to Budget 2027, or the potential implications of same for your clients, please do not hesitate to contact a member of the Tax team.