From changes to income tax, tax credits and USC to a reduction in Capital Gains Tax, new investment measures and changes affecting employers, Budget 2027 contains plenty for business owners and individuals to consider.

Our Tax team has reviewed the key announcements and what they could mean in practice. Here are some of the main measures from Budget 2027.

Income Tax, Tax Credits & USC

Budget 2027 introduces changes to income tax bands and credits, alongside an adjustment to the USC bands.

• The 20% income tax band increases to €46,500 for single individuals, €50,500 for single parents and €55,500 for married one-income couples.
• The combined 20% band for married couples with two incomes increases to €93,000, subject to the applicable transfer limits.
• The Single Person, PAYE and Earned Income tax credits increase by €125 to €2,125.
• The Married Person tax credit increases to €4,250, while the Single Child Carer Credit increases to €2,025.
• The Home Carer Tax Credit increases by €100 to €2,050.
• The 2% USC band is extended, with the upper threshold increasing from €28,700 to €30,300.

Capital Gains Tax & Investment

There are notable changes for investors and business owners, including a reduction in Capital Gains Tax and the introduction of a new State Investment Scheme.

• The standard Capital Gains Tax rate falls by two percentage points to 31%.
• Exit tax/deemed disposal on existing investment products falls by three percentage points to 35%.
• A new State Investment Scheme will offer tax-free investment in stocks and shares, subject to specified limits.
• Individuals will be able to invest up to €12,000 per year, with no tax on funds up to €50,000.
• Amounts above €50,000 will be subject to a 1% annual tax.
• Accounts under the new scheme are expected to become available from July 2027.

Employers, PRSI & Minimum Wage

Employment costs remain an important consideration for Irish businesses, with changes to both the National Minimum Wage and PRSI.

• The National Minimum Wage increases by €0.79 to €14.94 per hour.
• The employer PRSI threshold increases from €552 to €600 per week from 2027.
• The report notes that the higher minimum wage comes alongside other employment costs, including auto-enrolment and statutory sick pay.
• Employers should assess the combined effect of these changes when budgeting and planning workforce costs for 2027.

First-Time Buyers, Renters & Inheritance Tax

Budget 2027 contains several changes affecting home buyers, renters and those planning to pass wealth to the next generation.

• The Help to Buy Scheme increases by €5,000 to €35,000.
• The Rent Tax Credit increases by €150 to €1,150 for single renters and €2,300 for couples.
• The tax-free threshold under Rent-a-Room Relief increases to €16,000 and is extended to include newly installed detached auxiliary dwellings.
• The Category A Capital Acquisitions Tax threshold increases by €20,000 to €420,000.
• Category B increases to €44,000, while Category C increases to €22,000.

Housing & Infrastructure

Significant funding has been allocated to housing and infrastructure as part of Budget 2027.

• €9.4 billion has been allocated for housing.
• €3 billion will fund social housing delivery, including 11,250 new-build social homes.
• €225 million has been allocated to the Housing Infrastructure Investment Fund.
• €2.3 billion has been allocated to Uisce Éireann, including €1.5 billion to build capacity and resilience.
• An additional €6 billion has been allocated to progress MetroLink between 2027 and 2030.

Energy, Climate & Farming

Budget 2027 also includes measures covering energy costs, electric vehicles, climate investment and the agricultural sector.

• The restoration of excise on petrol and diesel has been postponed, with full restoration not due until 30 June 2027.
• VRT relief for electric vehicles is extended for a further two years to 31 December 2028.
• €654.5 million has been allocated to SEAI residential and community energy upgrade schemes.
• The Succession Farm Partnership tax credit doubles from €5,000 to €10,000.
• The three-year holding period for applications relating to Succession Farm Partnerships is being removed.
• VAT on respiratory vaccines for livestock is reduced from 23% to 9%.

Welfare, Childcare, Education & Health

A range of measures are also aimed at households and the cost of living.

• Pension and welfare rates increase by €10, alongside changes to carers’ supports and other welfare payments.
• Childcare measures target savings of €2,200 per year for a child in full-time care.
• The tax-free income limit for people minding children in their own homes increases from €15,000 to €20,000.
• The third-level student contribution fee falls by €150 to €2,350.
• The health budget increases by €1.7 billion to €29.1 billion, with additional funding for mental health services and other healthcare measures.

What Does Budget 2027 Mean for You?

As Fitzgerald Power Tax Partner Brian Kelly notes in our Budget 2027 report, the impact for business owners should not be assessed through any single measure. Changes to CGT, investment incentives, succession planning, R&D and employment taxes need to be considered together and against the plans for the business.

Our Budget 2027 Report provides a concise breakdown of the key announcements and the changes businesses and individuals should be aware of as they plan for the year ahead.

Download the full Budget 2027 Report – Here

If you have questions about how the Budget 2027 measures could affect you or your business, contact a member of the Fitzgerald Power Tax team.

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Budget 2026 marks a shift in policy towards supporting business and enterprise, moving away from the cost-of-living measures that defined previous budgets. This shift comes as Irish SMEs face not only domestic challenges but also heightened international tax risks, particularly the introduction of new US tariffs on EU goods. These external pressures add uncertainty for exporters and supply chain-dependent businesses, making the government’s business-focused approach especially timely.

A notable area in this year’s budget is the introduction of mandatory e-invoicing for business-to-business transactions. This aligns Ireland with EU digitalisation initiatives and aims to reduce administrative burdens, improve payment times, and enhance transparency for SMEs. E-invoicing is expected to modernise business processes and make it easier for SMEs to engage with the public sector.  More details to be announced shortly.

The construction sector is a major beneficiary, with the VAT rate on new apartments reduced to 9% until 2030 and an enhanced corporation tax deduction for apartment construction costs. These measures should improve project viability for SME builders and developers, while the extension of the Living City Initiative and the Residential Development Stamp Duty Refund Scheme further supports urban regeneration. However, these benefits are narrowly targeted, and SMEs in other construction areas may feel overlooked, especially as planning and regulatory challenges persist.

Beyond construction, the reduction of the VAT rate on food, catering, and hairdressing to 9% from July 2026 will benefit hospitality and personal services SMEs. The extension of the 9% VAT rate on gas and electricity until 2030, and an enhanced R&D tax credit, are further positives. The review of the interest deduction regime could be a game-changer for SME financing, but its impact will depend on the detail.

Despite these positives, some omissions – such as the lack of broad-based cost relief and measures to address wage, insurance, and regulatory burdens – will be seen as a missed opportunity. SMEs will be hoping for further action to support competitiveness and sustainability in the years ahead.

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The Government’s Summer Economic Statement, released in July, provided a clear indication of the fiscal parameters for Budget 2025, and for the most part, there have been few surprises.

The cost-of-living pressures and economic upheaval many have faced in recent years mean that both the Cost of Living and Social Protection packages, along with the USC rate cut, will offer a much-needed and anticipated boost for low to middle-income individuals, amounting to hundreds to euros.

The Housing Crisis continues to dominate  Budget 2025 announcements. The extension of the Help To Buy Scheme for first-time buyers until the end of 2029, along with an increase in the Rent Tax Credit, should assist in providing more certainty and security for both buyers and suppliers in the market.

From a business perspective, this year’s budget focused on reliefs to further encourage research, development and innovation, which will further assist in providing Ireland with a competitive advantage for attracting inward investment. The extension of the EIIS and Start Up relief incentives will also provide resilience and certainty for SMEs and start-up businesses.

Unsurprisingly, environmental sustainability remains one of the biggest challenges facing the current government. The tax incentives announced around ‘green initiatives’ are an unsurprising but essential step towards creating climate resilience in this country. Time will tell whether these measures are sufficient to drive the necessary shift, but there is no doubt that tax incentives will play an integral part in the government’s sustainability strategy in the coming years.

Finally, there was disappointment for SMEs, particularly the hospitality sector, with the absence of the much-lobbied-for VAT rate reduction. This omission is another setback for a sector that has faced numerous closures and hardship in recent months, with many calling for more targeted financial incentives in the budget.

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A giveaway budget it was not – but for this day at least everyone will feel a little better off, which is unusual.

Further widening of the tax bands and increased tax credits together with various amendments to the social welfare packages are acknowledgements of the cost of living pressures.

From a business perspective, the ‘a little for everyone’ theme is repeated. The most interesting element being the Increased Cost of Business Scheme, which will offer one-off grants up to 130,000 SMEs in the form of tiered grants equivalent to up to 50% of the commercial rates paid this year, with grants to be paid in early 2024.

The new targeted Capital Gains Tax relief for angel investors in innovative start-up SMEs allows angel investors to benefit from a reduced rate of CGT. The amendments to the Employment Investment Incentive scheme (EII) in standardising the investment period to four years for all investments and doubling the amount investors can claim relief on for four-year investments to €500,000 are welcome for smaller, early-stage businesses which are typically most in need of funding.

But as Michael McGrath said Budget 2024 was formed against a “backdrop of global uncertainty – both economic and geopolitical” so in reality every day seems like a Budget Day.

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Described by Paschal Donohoe as a “Cost of Living Budget”, Budget 2023 has focused on helping individuals and businesses deal with the inflation crisis. The Minister hopes to alleviate inflationary pressures without adding fuel to the fire – the success of which will only be possible to judge at a later date.

There was lots of pre-Budget talk about a new 30% income tax rate which hasn’t materialised. Instead, the Minister opted to leave the existing rates in place but has increased the standard rate bands. While Kwasi Kwarteng’s Budget strategies appear cavalier at best, Ireland’s competitiveness from an income tax perspective will be judged, at least in part, relative to our nearest neighbour.

Elsewhere, there was a strong focus on minimising the impact of the high rate of current inflation, with taxpayers being supported by increased tax credits, and a wider 20% band. In addition, a new yearly tax credit of €500 is to be introduced for renters in the private rental sector, with relief for rent paid in 2022 to be claimed next year.

From a business perspective, the small benefits exemption has been increased so an employer can now give employees up to 2 non-cash benefits tax-free each year subject to an overall maximum of €1,000. We also include an overview of the €1.4bn allocated to the new Business Energy Support Scheme (BESS).

There were welcome extensions to the KEEP and SARP schemes and some amendments to the R&D Tax Credit scheme to align with international norms and definitions.

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