Budget 2027 Ireland: What It Means for You

Tánaiste and Minister for Finance Simon Harris presented Budget 2027 on Tuesday 6 October 2026. After a year with no change to income tax bands or credits, this Budget includes an income tax package of almost €1.3 billion, with most changes taking effect from 1 January 2027.

Below we set out what has changed for income tax, USC, PRSI, capital gains tax, inheritance tax and investments. Then we work through three common households to show what it means for them in euro. To see what Budget 2027 means for your own take-home pay, try our Budget 2027 calculator.

Key Points

• The point at which you start paying 40% tax rises by €2,500, to €46,500 for a single person.
• The personal, PAYE and earned income tax credits each go up by €125.
• The rent tax credit rises by €150, to €1,150 a year for a single person, or €2,300 for a jointly assessed couple.
• The mortgage interest tax credit has not been extended, so 2026 is the last year you can claim it.
• The standard rate of capital gains tax falls from 33% to 31%, and inheritance tax thresholds rise, both from 7 October 2026.
• Tax on investment funds and life assurance policies falls from 38% to 35%, and a new Investment Account opens on 1 July 2027.
• In our examples, a single renter on €50,000 is €841 a year better off. A retired couple gains €1,332, including the State Pension increase. A two-income family with a mortgage gains just €53.

1. Income Tax

Here's how the main income tax figures change:

• 20% band, single person: €44,000 in 2026, €46,500 in 2027
• 20% band, single parent (Single Person Child Carer Credit): €48,000 in 2026, €50,500 in 2027
• 20% band, married couple with one income: €53,000 in 2026, €55,500 in 2027
• 20% band, married couple with two incomes: up to €88,000 in 2026, up to €93,000 in 2027 (the extra €37,500 is limited to the lower earner's income)
• Personal tax credit: €2,000 (single) or €4,000 (married) in 2026, rising to €2,125 or €4,250
• PAYE (employee) tax credit: €2,000 in 2026, €2,125 in 2027
• Earned income tax credit (self-employed): €2,000 in 2026, €2,125 in 2027
• Home carer tax credit: €1,950 in 2026, €2,050 in 2027

What it's worth: the higher 40% threshold saves up to €500 a year if you earn above €46,500. The credit increases save a single employee or self-employed person €250 a year, as long as they pay at least that much tax.

2. USC

The ceiling of the 2% USC band rises by €1,600, from €28,700 to €30,300. That saves up to €16 a year if you earn above €30,300. From 1 January 2027 the rates are:

• 0.5% on the first €12,012
• 2% from €12,013 to €30,300
• 3% from €30,301 to €70,044
• 8% above that

You still pay no USC if your income is €13,000 or less. If you're aged 70 or over, or have a full medical card, and your income is €60,000 or less, you pay no more than 2%.

3. PRSI

Increases to PRSI that were agreed before the Budget still go ahead. Employee PRSI rose from 4.2% to 4.35% on 1 October 2026, and will rise again to 4.5% on 1 October 2027.

This means most employees will pay more PRSI in 2027 than in 2026. Someone earning €50,000 will pay about €75 more.

If you're 66 or over and get the State Pension (Contributory), you don't pay PRSI.

4. Renters, Homeowners and First-Time Buyers

If You Rent

The rent tax credit is worth 20% of the rent you pay. For 2027 and 2028 the maximum rises from €1,000 to €1,150 for a single person, and from €2,000 to €2,300 for a jointly assessed couple. To get the full €1,150, you need to pay at least €5,750 in rent in the year.

If You Let a Room

From 1 January 2027, the rent-a-room limit rises from €14,000 to €16,000 a year. If you let a room in your own home and your income from it is under this limit, you pay no tax on it. For a married couple or civil partners, the €16,000 limit is shared between you. The relief is also being extended to certain designated auxiliary dwellings, such as self-contained garden units, installed after 27 July 2026 that meet the 2026 planning exemptions for these structures.

If You Have a Mortgage

The mortgage interest tax credit has not been extended. Under current law, 2026 is the last year it's available. If you qualify for 2026, make sure you claim it. It's worth up to €625 for this year.

If You're a First-Time Buyer

From 7 October 2026, the maximum Help to Buy refund rises by €5,000, from €30,000 to €35,000. You still get the lowest of €35,000, 10% of the purchase price, or the income tax and DIRT you paid over the previous four years. The other conditions, including the €500,000 limit on the price of the home, are unchanged.

5. What Budget 2027 Means for Three Households

To show what the changes mean in practice, we've worked through three common households. Each compares the full 2027 tax year with 2026, assuming income stays the same.

Ciara and Mark: Married With Two Children and a Mortgage

You may remember Ciara and Mark from our Budget preview. They're married, taxed jointly, with two children and a mortgage. Mark earns €54,400 and Ciara earns €35,000.

• Income tax: €9,535 in 2026, €9,380 in 2027 (€155 less)
• USC: €1,748 in 2026, €1,716 in 2027 (€32 less)
• PRSI: €3,788 in 2026, €3,922 in 2027 (€134 more)

Overall: they're about €53 a year better off, or about €1 a week.

The Budget gives them €780 in income tax savings: €500 from higher credits and €280 from the higher 40% threshold, which means all their income is now taxed at 20%. But in 2027 they lose the €625 mortgage interest tax credit, and the PRSI increases take another €134. Had the mortgage interest credit been extended, they would have been about €678 a year better off.

Aoife: Single, 25, Renting

Aoife is 25, earns €50,000 a year and pays €10,000 a year in rent.

• Income tax: €6,200 in 2026, €5,300 in 2027 (€900 less)
• USC: €1,033 in 2026, €1,017 in 2027 (€16 less)
• PRSI: €2,119 in 2026, €2,194 in 2027 (€75 more)

Overall: Aoife is €841 a year better off, or €16.17 a week.

Her income tax saving breaks down as €500 from the higher 40% threshold, €250 from the personal and PAYE credits, and €150 from the higher rent tax credit. As her rent is €10,000, she gets the full €1,150 credit.

Tom and Mary: A Retired Couple

Tom is 72 and Mary is 68. Both get the full State Pension (Contributory), and Mary also gets an occupational pension of €20,000 a year from her former employer. They're taxed jointly.

• Gross income: €51,127 in 2026, €52,167 in 2027 (€1,040 more from the €10 a week State Pension increase for each of them)
• Income tax: €1,735 in 2026, €1,443 in 2027 (€292 less)
• USC: €220 in both years
• PRSI: none

Overall: they're €1,332 a year better off, or €25.62 a week. €1,040 of that is the higher State Pension, before tax. The start date of the State Pension increase hasn't been announced yet. Like the Department of Finance's own examples, we've assumed it applies for the whole of 2027. The higher credits also cut their tax bill by €500, which more than covers the €208 of tax due on the pension increase.

A few points that often surprise retired people:

• The State Pension is taxable, but it isn't subject to USC. Their USC is charged only on Mary's €20,000 occupational pension.
• Each of them gets the PAYE tax credit. Revenue allows it on the State Pension as well as on a pension from a former employer.
• They get the €490 age tax credit for a married couple, as they're both over 65.

(These examples assume no other income, reliefs or credits, such as pension contributions or medical expenses, and use the standard State Pension rate for someone who began claiming at 66.)

To see your own figures, try our Budget 2027 calculator.

6. Capital Gains Tax

The standard rate of capital gains tax falls by 2 percentage points, from 33% to 31%, for disposals made on or after 7 October 2026. The 33% rate on disposals of development land doesn't change. The €1,270 annual exemption is unchanged.

On a €100,000 gain, with no other gains that year, the tax falls from €32,581 to €30,606, a saving of €1,975.

Disposals up to 6 October 2026 are taxed at 33%. The date of disposal is normally the date the contract is made, not the date you're paid. For a conditional contract, it's the date the condition is met.

7. Inheritance Tax and Gifts

All three tax-free thresholds rise for gifts and inheritances taken on or after 7 October 2026:

• From a parent (Group A): €400,000 to €420,000
• From a brother, sister, aunt, uncle or grandparent (Group B): €40,000 to €44,000
• From anyone else (Group C): €20,000 to €22,000

The rate stays at 33%.

For example, a child inheriting a €500,000 home from a parent, with no earlier gifts or inheritances from their parents and no exemptions available, would pay €26,400 in inheritance tax under the new threshold, down from €33,000. That's a saving of €6,600.

8. If You Invest in Funds or Life Assurance Policies

Lower Tax on Funds and Policies

For individual investors, the tax on investment funds and life assurance policies, often called exit tax, falls from 38% to 35%. The start date hasn't been announced yet. We'll update this post when it is. The lower rate covers:

• Irish investment funds, including Irish-based exchange-traded funds (ETFs)
• Equivalent funds based in the EU, the EEA or an OECD country Ireland has a tax treaty with, including ETFs taxed under these rules
• Life assurance investment policies taken out after 2001 with an Irish life company, or with one based in the EU, the EEA or an OECD country Ireland has a tax treaty with

It doesn't apply to personal portfolio funds or policies (where you can choose the underlying assets yourself), which stay at a higher rate.

For example, if you sell fund units with a €20,000 gain, the tax falls from €7,600 to €7,000, a saving of €600.

The 8-year deemed disposal rule hasn't changed. You still pay tax on any gain every 8 years, even if you haven't sold. The Minister said the Government will keep working on the wider regime, "including the rate of taxation, deemed disposal and the administrative burden facing investors". So more changes may follow.

The New Investment Account

A new Investment Account opens on 1 July 2027. Here's how it works:

• You can put in up to €12,000 a year, and there's no minimum.
• The first €50,000 of the account's value is tax-free. Anything above €50,000 is taxed at a flat 1% a year, whether the account makes a profit or a loss. The value is averaged across the year.
• For example, an account worth €60,000 on average for the year would pay €100 in tax.
• You can hold shares, bonds, investment funds and insurance-based investment products in the account.
• The 8-year deemed disposal rule doesn't apply.
• Your provider works out and pays the tax for you, so you won't need to calculate or return the tax yourself.
• You must be resident in Ireland, aged 18 or over, and have a PPSN. At launch, you can have only one account.

9. Other Changes

• Childminders: the tax-free limit for childminding in your own home rises from €15,000 to €20,000 a year, and the cap on the number of children you can mind under the relief is removed (you must still meet childminding regulations). The start date hasn't been announced yet.
• Selling electricity back to the grid: the amount households can earn tax-free (with no income tax, USC or PRSI) from selling electricity they generate back to the grid, for example from solar panels, rises from €400 to €600 a year. The start date hasn't been announced yet.
• Third-level fees: the amount of fees that doesn't qualify for tax relief is being reduced to match the Student Contribution Fee. This means you may be able to claim 20% relief on the Student Contribution Fee for a second or later student in the family. The new amount and the start date haven't been announced yet.
• Farmers: the Succession Farm Partnership tax credit doubles from €5,000 to €10,000 for partnerships registered from 1 January 2027, and the three-year holding period is removed for applications made from 1 January 2027. The accelerated capital allowance for farm safety equipment is extended to 31 December 2029, and 12 more types of equipment are added.
• Investing in small businesses: the Government intends to extend the Employment Investment Incentive, the Start-up Capital Incentive, Start-up Relief for Entrepreneurs and Angel Investor Relief in their current form. This depends on new EU state aid rules, due to apply from 1 January 2027.
• Derelict properties: a new Derelict Property Tax of 7% of the property's self-assessed value will apply to properties on the new registers of derelict properties kept by local authorities, starting with towns of 4,000 people or more. Preliminary registers will be published on 1 September 2027, and owners can ask for a review until 30 November 2027. The first tax return and payment are due by 23 June 2028. You can avoid the tax by bringing the property back into use, demolishing it, or selling it to someone who will deal with the dereliction.
• Self-employed professionals: professional services withholding tax will move from a flat 20% to a personalised rate for each individual, once the change is commenced.
• Pensions: the age-related factors used to value defined benefit pensions against the Standard Fund Threshold will change from 1 January 2027.

10. What Happens Next

The changes will be made law in the Finance (No. 2) Bill 2026, which will be published in the coming weeks. The income tax, USC and credit changes apply from 1 January 2027. Your 2027 tax credit certificate should show the new credits and bands automatically, so you don't need to apply. Check your first payslip of 2027 to make sure they've been applied.

Before the year ends:

1. Claim what you missed for 2022 before 31 December 2026. After that, you can no longer claim back overpaid tax for 2022. The rent tax credit, medical expenses and home carer credit are often missed.
2. Claim the 2026 mortgage interest tax credit if you qualify. It won't be available for 2027.
3. Claim the 2026 rent tax credit if you rent and haven't claimed it yet.
4. Get advice before a big sale or gift. The new CGT rate and inheritance tax thresholds apply from 7 October 2026.

How Irish Tax Hub can help: we can work out exactly what Budget 2027 means for you, make sure you're claiming every credit you're entitled to, and advise you before any sale or gift. If you'd like help, get in touch with us.