In this special Budget 2027 Update, we highlight the key measures announced and consider what they may mean for individuals and businesses. Our aim is to cut through the headlines and provide a clear, practical overview of the changes, helping you understand their potential impact and identify any opportunities or areas where forward planning may be required.
Budget 2027 delivers a broad package of tax changes, increased supports and public investment, with a focus on easing cost-of-living pressures and supporting households and businesses. Positives include changes to income tax, increased social welfare payments, lower childcare costs and enhanced supports for renters, first-time buyers and investment. The new Savings Scheme was probably the only significant new announcement and while welcomed, still requires further detail to fully assess.
However, the Budget also presents challenges, particularly for small businesses facing continued cost pressures and higher employment costs. Overall, Budget 2027 provides welcome measures across a number of areas, although the longer-term impact will depend on implementation and economic conditions.
Income Tax & Capital Gains Tax
Main Tax Credits - The Personal Tax Credit, Employee (PAYE) Tax Credit, and Earned Income Tax Credit all increase by €125 from €2,000 to €2,150.
Standard Rate Cut-Off Point - The 20% tax band threshold increases by €2,500. For a single worker, the entry point to the 40% higher rate moves from €44,000 to €46,500. Proportionate band increases apply to married couples and civil partners
USC - The 3% band for USC will increase by €1,600, bringing the threshold from €28,700 to €30,300.
Rental Tax Credit - The credit has increased to €1,250 for a single renter and €2,500 for a married couple
Home Carer Credit - Increased by €100, bringing the credit allowance up to €2,050.
Minimum Wage - Effective from 1 January 2027, the minimum wage will increase by €0.79 to €14.94 per hour.
Rent-a-Room Relief - The annual tax-free earnings threshold increases to €16,000 and will be extended to include newly installed detached auxiliary dwellings built after 27 July 2026.
Standard Rate of Capital Gains Tax - will decrease by 2% from 33% to 31% for disposals after 7 October 2026. The separate 33% CGT rate applying to disposals of development land will remain unchanged.
Entrepreneur Relief - The lifetime limit for qualifying gains under the Revised Entrepreneur Relief will increase from €1.5m to €5m for disposals made on or after 1 January 2027.
Investment Undertaking Tax and Life Assurance Exit Tax - The tax rate applicable to Irish and equivalent offshore funds and foreign life assurance products will be reduced from 38% to 35%.
Capital Acquisitions Tax
Inheritance tax-free thresholds are widened across all tax groups with effect from 7 October 2026
Group A (Child) Rises from €400,000 to €420,000.
Group B (Sibling/Niece/Nephew) Rises from €40,000 to €44,000.
Group C (Non-relatives) Rises from €20,000 to €22,000.
Business Taxation
Employer PRSI - The employer PRSI threshold is raised from €552 to €600 per week.
Changes to Preliminary Corporation Tax – The preliminary corporation tax rules will be amended, including an increase from €200,000 to €350,000 in the threshold used to determine whether a company is regarded as a small company.
Research & Development (R&D) - The threshold for first-year refunds under the R&D tax credit scheme will increase from €87,500 to €105,000 to support smaller projects.
Start-up Companies - Corporation tax relief for start-up companies is being extended to 31 December 2030
Professional Services Withholding Tax – Will be reformed through the introduction of personalised withholding tax rates in place of the existing flat 20% rate.
Property Measures
Help to Buy Scheme - The maximum amount a first-time buyer can claim will increase by €5,000, to €35,000, with immediate effect.
A new Derelict Property Tax (DPT) - A preliminary register of dereliction properties will be published on 1 September 2027 and Revenue have confirmed the rate of tax will be 7 per cent.
Residential Zoned Land Tax (RZLT) - Landowners will have a further opportunity to apply to have the zoning of land changed, provided there is no extant planning permission or current planning application for residential development. The deadline is likely to be 30 April 2027, effectively removing the Residential Zoned Land Tax (RZLT) charge for 2027.
Other Measures
New investment account - A new investment account will be available from 1 July 2027. It will have a tax-free threshold of €50,000 and a 1% tax on amounts above that. Up to €12,000 can be contributed per year, with no minimum.
Further and higher education - The annual student contribution fee will decrease from €2,500 to €2,350, effective immediately. Students who have already paid their fees for this year will be able to request a refund in January 2027. The threshold for tax relief for qualifying tuition fees for approved third-level courses has decreased.
VRT - Extension of €5,000 VRT relief for electric vehicles extended to 31 December 2028. There will be a 1% increase in VRT rates for cars in bands 3 to 20 with higher emissions.
How MBSL Can Support You
As more details and clarifications emerge in the coming days, we will continue to monitor developments closely. If you would like to discuss how any of the measures in Budget 2027 may affect your personal or business circumstances, please get in touch with our team.
We are here to support you with clear, practical advice so that you can plan with confidence for the year ahead. For tailored advice or to schedule an appointment, please contact Kieran O'Brien +353 1 2984366 or at Kieran.OBrien@mbsl.ie