OVERVIEW
This year’s Budget announcement brought few surprises. With kite-flying under way as early as July, only a handful of measures unveiled on the day could genuinely be described as new.
Budget 2027 marked the first in a decade without Paschal Donohoe in one of the two money ministries, and was accompanied by a notably greater degree of inter-party tension than many of its predecessors.
Minister for Public Expenditure Jack Chambers embraced the role of prudent purse-string holder with gusto, reportedly clashing with Cabinet colleagues and earning the nicknames “Dr No” and the “Chambers of Horrors” for his refusal to budge on spending demands. Meanwhile, Tánaiste Simon Harris, announcing his first Budget as Minister for Finance, was keen to reassure Fine Gael’s “early risers” that they would see relief through the income tax package, following widespread disappointment with last year’s offering.
Delivering his maiden Budget speech, the Tánaiste spoke of the need to lay out a budget that would bring us to a place where “work is rewarded, risk is repaid and investments in our future bear fruit for decades to come.”
Set against a backdrop of heightened global volatility, from conflict and energy pressures to shifting trade patterns and financial uncertainty, the Tánaiste framed the Budget as an exercise in balancing “today’s needs with tomorrow’s musts” – but did it?
The much-touted income tax package will deliver approximately €700 in savings for an individual earning €50,000, while a reduction in the carbon tax is intended to offer some relief from higher energy costs. Childcare cost reductions and an increase in the minimum wage provide further near-term support for households and workers, with accompanying measures aimed at helping businesses absorb the additional wage costs. Longer-term measures include increased infrastructure spending, further allocations from the National Training Fund and additional contributions to the State’s rainy-day funds.
For all the headlines, it will be many weeks or even months before Budget 2027 impacts people's pockets. The savings account will not become available until next July, and families will be watching closely for when the lower childcare fees actually reach their bills. Until then, these are promises on paper, and as with any budget, the proof will be in the pudding.
Here are the key takeaways from Budget 2027’s €8.5 billion package, which included €1.65 billion in tax measures:
KEY TAKEAWAYS
Income tax and personal taxation
Increase in the Standard Rate Cut-Off Point by €2,500 to €46,500, alongside increases of €125 in the Personal, Employee and Earned Income Tax Credits and €100 in the Home Carer Tax Credit, with an increase in the entry threshold for the 3% USC band from €28,700 to €30,300.
Overall this will see a reduction of more than €700 in income tax and USC for a person earning €50,000, and €1,500 for a dual-income couple earning €100,000.
Changes to the Capital Acquisition Tax (Inheritance Tax) Thresholds will see the tax-free threshold for children inheriting from their parents increase from €400,000 to €420,000, with increases across the other inheritance categories also announced.
Business, investment and work
Increase in the employer PRSI threshold from €552 to €600 per week.
€1bn ISIF investment programme and €3m for Enterprise Ireland to establish Startup Ireland.
Increase in R&D tax credit subcontracting limits and in the first-year payment threshold from €87,500 to €105,000.
Extension of the Knowledge Development Box and a number of start-up and investment reliefs.
Funding for the National Artificial Intelligence Office to implement the AI Act.
Reduction in the standard Capital Gains Tax rate from 33% to 31%.
Reduction in the rates of tax that apply to investors in Irish and equivalent offshore funds, and Irish and foreign life assurance products, including Investment Undertaking Tax and Life Assurance Exit Tax, from 38% to 35% from 1 January 2027.
Savings and Investment Scheme
Introduction of a new Irish Investment Account from 1 July 2027, with a €50,000 tax-free threshold, 1% tax above that level and a €12,000 annual contribution limit.
Exemption from CGT, Dividend Withholding Tax, Investment Undertaking Tax, Life Assurance Exit Tax and deemed disposal.
Inclusion of shares, bonds, ETFs and other funds as eligible investments.
Energy and Fuel
Reduction in carbon tax on home heating oil and natural gas from €63.50 to €48.50 per tonne of CO₂, with a commitment that these rates will be maintained for the lifetime of the Government.
Extension of reduced fuel excise rates to 28 February 2027, followed by four-phased restoration to June.
€654.5m for SEAI residential and community energy upgrades, including solar PV funding, retrofit grants and a boiler scrappage scheme.
Extension of VRT relief for electric vehicles to the end of 2028.
Cost of living and social welfare
Increase in weekly social welfare rates by €10
Increase in the Fuel Allowance by €5 per week, the Living Alone Allowance by €3 per week and the Fuel Allowance income threshold for single pensioners to €641 per week.
Increase in the Child Support Payment by €6 per week and Working Family Payment income thresholds by €30.
Childcare
Reduction in maximum childcare fees from €735 to €550 per month for children up to senior infants.
Increase in the Childcare Services Relief tax exemption from €15,000 to €20,000 and removal of the limit on the number of children that can be minded under the relief.
Additional funding to expand the childcare workforce and supports for children with disabilities.
Housing
€9.4bn allocation to housing in 2027, including €5.6bn in capital funding, €3bn for social housing and more than €1bn for the Starter Homes Programme and other affordability supports.
Increase in the Rent Tax Credit to €1,150 for individuals and €2,300 for couples, and in the maximum Help-to-Buy refund to €35,000.
Increase in the Rent-a-Room tax-free threshold from €14,000 to €16,000 and extension of the relief to newly installed Detached Auxiliary Dwellings.
Introduction of a new 7% Derelict Property Tax and additional €200m annual spending or borrowing capacity for local authorities.
Education and Skills
€17m increase in school capitation funding and €33m additional funding for school transport.
Provision for 2,339 additional SNAs and 1,353 additional special education teachers.
€1.6bn capital allocation for the school estate, including special education accommodation.
Permanent €150 reduction in the Student Contribution Fee, enhanced grants for families with more than one child in higher education and a 4.5% increase in SUSI maintenance grants.
€360m three-year skills package from the National Training Fund, including €150m for skills resilience and AI-related skills.
Health
Additional €1.6bn in current health expenditure and €1.7bn in capital funding.
Provision of 1.8m additional Home Support hours, expanded GP out-of-hours, dental and orthodontic services
Extension of the free contraception scheme up to age 37.
Provision of 33,000 additional hours of free counselling.
Transport and Infrastructure
€20.3bn capital investment allocation for 2027.
Additional investment in DART+, BusConnects and Cork Area Commuter Rail, alongside €6bn in additional Exchequer funding for MetroLink between 2027 and 2030.
€2.3bn allocation to Uisce Éireann, including €1.5bn in capital funding.
Disability
Introduction of a new €500 Cost of Disability Payment.
Provision of 489 additional residential care packages and 1,500 new day-service places.
Increase in home support and personal assistance by 191,000 hours and in the disability services workforce by 930.
Agriculture
€31m for a new Fertiliser Scheme and €22m for the National Sheep Welfare Scheme.
Reduction in VAT on respiratory livestock vaccines from 23% to 9%.
Increase in the Succession Farm Partnership tax credit from €5,000 to €10,000 and in the Farmers Flat Rate Addition from 4.5% to 4.8%.
Extension of the accelerated Wear and Tear Allowance for Farm Safety Equipment to the end of 2029.
Revenue raisers
Increase in excise duty on a packet of 20 cigarettes by €1 and on e-liquids by 20 cent per millilitre.
One-year extension of the Bank Levy, targeting €200m.
Increase in VRT rates by 1% on higher-polluting cars in bands 3 to 20.
Overall spending
€7.1bn increase in public expenditure in 2027, bringing gross public expenditure to €125.6bn.
€20.3bn capital investment allocation and moderation of current expenditure growth to 6%.
Establishment of a new Public Spending Efficiency Taskforce.