What Ireland’s tax changes mean for you and your business
It’s been a while since I updated the blog, and with Budget 2027 announced earlier this week, now seems a good time.
Budget 2027 brings income tax reductions for workers, a proposed new investment account and targeted cash flow support for businesses. For property owners and families planning to transfer wealth, it also creates reasons to review planning.
However, the modest increases in inheritance tax thresholds fall short for people without children who wish to leave assets to nieces or nephews.
The Budget also misses an opportunity to introduce targeted reliefs for parents wishing to downsize or transfer property to their children during their lifetime. These remain very significant gaps for families planning how to pass wealth to the next generation.
The modest increases in tax credits and income tax bands offer welcome relief for workers. Disappointingly for many parents, however, Child Benefit remains unchanged at €140 per month, although eligible families will receive an increase in the separate Child Support Payment of €6
Overall, Budget 2027 is a mixed bag.
Workers could keep more of their income
From 1 January 2027, the announced standard income tax band for a single person rises from €44,000 to €46,500. This means an additional €2,500 can be taxed at 20% rather than 40%, giving a saving of up to €500 a year.
The personal tax credit and the employee or earned income tax credit each increase by €125 to €2,125. The ceiling of the 2% USC band also rises from €28,700 to €30,300.
The changes give a single PAYE employee earning €50,000 an illustrative annual income tax and USC saving of €766. However, €50,000 is a convenient example because this worker earns enough to receive the full benefit of the wider tax band and increased credits. Workers on lower incomes who cannot fully benefit from the wider tax band or increased credits will receive less. While higher earners receive the same income tax and USC reduction, rising PRSI contributions absorb more of that saving. The €766 figure is therefore not a typical saving for every worker.
More support for qualifying renters and homeowners
The maximum Rent Tax Credit is set to rise to €1,150 for individuals and €2,300 for jointly assessed couples for 2027 and 2028. The amount available depends on qualifying rent and the income tax liability against which the credit can be used.
The annual Rent-a-Room Relief ceiling is also due to increase from €14,000 to €16,000 from January 2027, with an extension to certain qualifying auxiliary dwellings. This could make providing accommodation more attractive but planning compliance and the relief’s conditions remain essential.
The Budget summary also reports an increase in the Help to Buy maximum from €30,000 to €35,000.
A simpler investment account is on the way
The proposed Irish Investment Account is scheduled to open on 1 July 2027, subject to legislation. The announced design allows eligible adults to contribute up to €12,000 annually, with the first €50,000 of account value tax free and a 1% annual charge on the excess.
The provider would manage the account’s tax administration, and the usual exit taxes and deemed disposal rules would not apply within it.
This could simplify investing considerably. However, the charge is based on account values so it can arise even during a year of investment losses.
For example, an account could fall from €80,000 to €70,000 over a full year. representing an investment loss of €10,000. If its average daily value during the year were €75,000, the proposed annual charge would still apply.
Fees and investment risk should all form part of the overall decision.
Capital gains tax falls, but inheritance changes are modest
Revenue confirms that the standard CGT rate falls from 33% to 31% for disposals on or after 7 October 2026. Interestingly, development land remains subject to 33%.
For an asset subject to the standard rate, a €100,000 taxable gain would now produce €31,000 of CGT instead of €33,000, assuming no other relief applies.
The announced Capital Acquisitions Tax thresholds increase to €420,000 for Group A, €44,000 for Group B and €22,000 for Group C. CAT remains at 33%. These thresholds apply cumulatively to relevant benefits within each group; they are not a new allowance for every gift or inheritance. The increased thresholds apply to gifts and inheritances taken on or after 7 October 2026.
Businesses should review cash flow and reporting
The Budget proposes a higher first instalment threshold for R&D tax credits, rising from €87,500 to €105,000, alongside changes to qualifying costs. Receiving more of a credit earlier can improve cash flow without increasing the total credit itself.
The small company threshold for preliminary corporation tax is also set to rise from €200,000 to €350,000 of prior-year liability. Companies should confirm its conditions and commencement before changing payment schedules.
From January 2027, employers are to have a monthly reporting option for relevant tax-free employee benefits, with reporting by the 14th of the following month. The employer PRSI earnings threshold for the lower rate is also due to rise to €600 weekly. Payroll budgets should reflect the PRSI rates and the announced minimum wage increase together.
Property owners should assess dereliction exposure
A proposed Derelict Property Tax at 7% of self-assessed market value could create a substantial annual cost for properties within scope.
Owners should monitor the local authority registers, review rights and implementation timetable, and assess repair or redevelopment options.
What should you do now?
For larger decisions, particularly investments, property transactions and succession, confirm the final legislation and commencement dates before taking any action.
A focused review with your tax adviser can help turn the Budget changes into a practical plan.
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