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7 October, 2026
Beyond words goes here
As anticipated, Minister Harris sought to strike a balance between supporting households and businesses while maintaining a focus on long-term fiscal sustainability.
With an overall package of €8.65 billion, the Budget combines tax reductions, targeted cost-of-living supports and increased public investment, while continuing to build financial resilience through budget surpluses and contributions to long-term savings funds. The measures announced reflect a clear emphasis on rewarding work, strengthening economic resilience and investing in Ireland's future growth.
The changes may also influence the personal financial planning, long-term retirement planning and investment decisions for many households and business owners.
While we look forward to the Finance Bill which will provide more detail and may set out further changes, we have outlined some of the additional tax changes which we consider most relevant.
The point at which a single person enters the 40% income tax rate will increase by €2,500, from €44,000 to €46,500.
For married couples and civil partners with one income, the standard rate band will also increase by €2,500, from €53,000 to €55,500. For two-income couples, the maximum increase available for the lower-earning spouse or civil partner will rise to €37,500.
The personal, employee and earned income tax credits will each increase by €125, from €2,000 to €2,125. The Home Carer Tax Credit will increase by €100, from €1,950 to €2,050.
The point at which the 3% USC rate applies will also increase (from €28,700 to €30,300) to reflect the increase in the national minimum wage.
The agreed phased increases in employee PRSI, rising from 4.2% to 4.35% on 1 October 2026 and to 4.5% on 1 October 2027, should also be considered when evaluating the overall effect on take-home pay.
Rent-a-room relief was also increased to €16,000.
In a welcome change for families, and for the first time since 2024, all three CAT thresholds will increase, providing additional flexibility for those undertaking succession planning and planning the transfer of wealth across generations.
The Group A threshold will increase by €20,000, from €400,000 to €420,000. This threshold generally applies to gifts and inheritances received by a child from a parent. At the current CAT rate of 33%, the increase could reduce the CAT liability by up to €6,600. The Group B threshold will increase from €40,000 to €44,000, while the Group C threshold will increase from €20,000 to €22,000.
While we welcome the increase in the Group A threshold, it is worth noting that this remains below the threshold which applied more than 20 years ago and is significantly below its historic high of €542,544 in 2009. Given the substantial appreciation in property and other asset values over the intervening period, we would have welcomed a more meaningful increase.
In a welcome move for investors, Budget 2027 included a reduction in the Capital Gains Tax (CGT) rate from 33% to 31%, with no change to the rate applying to disposals of development land. Despite this reduction, Ireland continues to have one of the highest CGT rates in the EU, and the change may be viewed as a first step towards improving Ireland's competitiveness as a location for investment and entrepreneurship.
Following on from the rate reduction announced in Budget 2026, the tax rate applicable to life assurance policies and investment funds has been further reduced from 38% to 35%. This narrows, but does not eliminate, the gap between the tax treatment of these products and direct investments and should be welcomed by long-term savers and investors.
The Minister also announced plans to simplify the legislation governing the taxation of investment products. This will provide more clarity on how fund based investments are taxed. A simplification of the rules would be a welcome development and may help investors better understand an area which has historically been complex and difficult for investors to navigate.
Budget 2027 announced that the highly anticipated Investment Account will be available from 1 July 2027. This new account will include a tax-free threshold of €50,000, with a flat tax rate of 1% applying only to the value of the account above that threshold. This model is similar to the Swedish ISK and the UK ISA, as previously indicated.
Annual contributions to the Investment Account will be capped at €12,000, with no minimum contribution required. For example, where an account is valued at €55,000, only €5,000 would be above the tax-free threshold and the 1% charge would result in tax payable of €50.
Given the annual contribution limit of €12,000 and the €50,000 tax-free threshold, the Minister noted that a flat-rate tax liability may not arise for several years. Where a liability does arise, it is expected to be relatively modest.
It is noteworthy that the participants need to be 18 years old. As a result, you will not be able to open an account on behalf of a minor child. It is expected a Junior version of the Investment Account will be available in future years.
Other welcome features include the absence of taxes including CGT, Exit Tax and Dividend Withholding Tax (DWT), no deemed disposal rule, and access to a broad range of investments including shares, bonds, ETFs and other funds.
Investors will also be able to choose from a range of eligible providers, ranging from banks, investment firms (i.e. MiFID-authorised firms, such as Davy), regulated fund managers and insurance companies. This breadth of providers should promote accessibility to all, which the Minister outlined as a key objective of the new Investment Account.
The account provider will be responsible for all tax reporting, administration and the remittance of any tax due to Revenue. By removing these compliance obligations from individual investors, the regime is expected to simplify the investment process and further support accessibility and participation.
The introduction of this new Investment Account, together with initial reforms to the Exit Tax regimes, is expected to encourage wider retail participation in investment markets.
There were no changes to pensions announced in Budget 2027. However, the Tánaiste noted that changes to defined benefit valuation factors will be outlined in the Finance Bill to take effect from 1 January 2027.
This change could have the most impact for public service schemes. Based on the detail of a Finance Bill amendment, which wasn’t accepted last year, this proposal could reduce the tax value of these pensions by an average of 32%, with reductions of up to 36% in some cases, depending on the individual's age at retirement.
This was a recommendation from the de Buitleir report and we are hopeful that other recommendations could also be included in the Finance Bill. The recent tax strategy papers stated that an inter-Departmental group chaired by the Department of Finance were also considering:
The Minister announced that the Employment Investment Incentive (EII), the Start-Up Capital Incentive (SCI), the Start-Up Relief for Entrepreneurs (SURE) and Angel Investor Relief are expected to be extended in their current format, subject to the adoption of the revised EU General Block Exemption Regulation (GBER) which is planned for the end of 2026, with entry into force scheduled for 1 January 2027.
These schemes provide tax incentives to support investment in qualifying SMEs and start-up businesses. The measures should help SMEs continue to attract risk capital from private investors.
There were some positive changes which could impact businesses. The measures include enhancements to the R&D Tax Credit, an extension of both the Knowledge Development Box and Start-Up Relief for new companies, and more flexible preliminary corporation tax payment rules, including an increase in the small company threshold from €200,000 to €350,000.
Measures impacting the agricultural sector include accelerated capital allowances for farm safety equipment to 31 December 2029 and an increase in the Succession Farm Partnerships tax credit from €5,000 to €10,000 for partnerships registered from 1 January 2027.
Budget 2027 reflects the challenge in balancing affordability concerns with longer-term structural tax reform. While the package is more modest than we proposed in our Pre-Budget Submission, it contains some positive measures for taxpayers, businesses and investors. We await the publication of the Finance Bill 2026 for more details.
Our wealth management experts can help you understand the impact of tax and policy changes on your long-term financial plans.
This article is based on our understanding of Budget 2027 as presented by the Minister for Finance, which is due to be implemented in the forthcoming Finance Act. Changes may be made by the Minister prior to implementation. This article is general in nature and is not intended to constitute tax, financial or legal advice. It does not take account of your financial situation or investment objectives. Prior to making any decisions which have tax, legal or other financial implications, you should seek independent professional advice.