Budget 2027: Key Points.

The 2027 Budget was announced today, Tuesday 6 October, by Minister for Finance Simon Harris and Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, Jack Chambers.

With cost-of-living pressures remaining a key concern for households and businesses, Budget 2027 focuses on increasing disposable income, supporting energy affordability and providing targeted tax relief. The Government has unveiled a package worth €8.65 billion, comprising €7 billion in new spending measures and €1.65 billion in tax changes.

We set out below the key measures announced as part of Budget 2027.

Taxation

  • The entry point for the higher rate of income tax will increase by €2,500.
  • Main tax credits will increase by €125, while the Home Carer Credit will increase by €100.
  • The ceiling for the second USC band will increase by €1,600, from €28,700 to €30,300.
  • Capital Acquisitions Tax thresholds will increase, with the Group A threshold increasing by 5% and the Group B and Group C thresholds increasing by 10%.
  • The standard rate of Capital Gains Tax will decrease from 33% to 31%.
  • The rate of Investment Undertaking Tax and Life Assurance Exit Tax will decrease from 38% to 35%.
  • A legislative framework will be introduced for a new Investment Account.

Housing

  • The maximum level of Help to Buy relief will increase by €5,000 to €35,000.
  • The Rent Tax Credit will increase by €150 to €1,150 for a single claimant and by €300 to €2,300 for a couple.
  • Rent-a-Room Relief will be extended to certain garden, auxiliary and modular dwellings installed after 27 July 2026, with the relief threshold increasing to €16,000.
  • Over €1 billion has been allocated to the Starter Homes programme, with additional supports available through the Help to Buy Initiative.

 Childcare

  • Maximum childcare fees will reduce from €735 to €550 per month, saving families up to €2,220 per year.
  • Tax relief available under the childcare services scheme will increase from €15,000 to €20,000, and the cap on the number of children that can be minded will be removed.

Cost of Living

  • Weekly social welfare payments will increase by €10.
  • Fuel Allowance will increase by €5 per week.
  • Child support payments will increase by €6 per week for all eligible children.
  • Working Family Payment income thresholds will rise by €30 per week.
  • Living Alone Allowance will increase by €3 per week.

Energy

  • In light of ongoing cost-of-living pressures, the carbon tax will not increase as originally scheduled in Budget 2027.
  • The carbon tax on home heating oil (kerosene) and natural gas will be reduced to €48.50 per tonne of CO2 and maintained at this rate for the lifetime of the Government.
  • A record €654.5 million will be allocated to support home energy upgrades, including enhanced retrofit and solar panel supports.
  • The annual tax exemption for consumers who generate electricity at home and sell excess electricity to the grid will increase from €400 to €600.

Business Measures

  • Amendments to the R&D tax credit will enhance and simplify the regime, including increases to subcontracting limits and the first-year payment threshold.
  • Section 486C tax relief for start-up companies will be extended to 31 December 2030.
  • The Vehicle Registration Tax (VRT) relief for electric vehicles, due to expire on 31 December 2026, will be extended until the end of 2028.

 

*This article provides a summary of selected Budget 2027 measures and does not constitute tax, legal or financial advice. Specific advice should be sought in relation to individual circumstances.