Budget 2027: what does it mean for you

Budget 2027 was announced on 6 October 2026 against a backdrop of global energy, geopolitical and bond-market uncertainty. Minister for Finance Simon Harris described it as setting a path on which work is rewarded, risk is repaid and investment in Ireland’s future bears fruit over the longer term. The Government set out tax measures costing approximately €1.65 billion, combining personal tax reductions with measures intended to support investment, enterprise and economic resilience. Goodbody Head of Tax Catriona Coady considers the changes most likely to affect the individuals, families and entrepreneurs we serve.  

A key area of focus for many of our clients is succession planning. How does Budget 2027 change the inheritance and gift tax position for families?

Budget 2027 increased all three tax-free thresholds for Capital Acquisitions Tax (CAT), increasing the value of gifts and inheritances that may be received before CAT arises. The revised thresholds apply to gifts and inheritances taken on or after 7 October 2026:

At the 33% CAT rate, the increases produce maximum tax savings of €6,600 under Group A, €1,320 under Group B and €660 under Group C. While welcome, the more modest increases to Groups B and C do little to address calls for wider reform of the relationship-based threshold system.

What does Budget 2027 bring for business owners? 

Harris placed considerable emphasis on rewarding entrepreneurship and risk-taking and helping home-grown Irish businesses to scale. Against that backdrop, the standard Capital Gains Tax rate has been reduced from 33% to 31% for disposals made on or after 7 October 2026. This is the first change to the headline rate since 6 December 2012 and is intended to release capital for reinvestment and improve competitiveness. However, the 33% rate continues to apply to disposals of development land.

Other measures of interest to business owners include:

• the extension in their current form of Employment Investment Incentive (EII), Start-Up Capital Incentive (SCI), Start-Up Relief for Entrepreneurs (SURE) and Angel Investor Relief;
• enhancements to the R&D tax credit;
• the extension of the Knowledge Development Box to 1 January 2032 and start-up corporation tax relief to 31 December 2030;
• more flexible preliminary corporation tax rules, including an increase in the small-company threshold from €200,000 to €350,000; and
• for the agricultural sector, the extension of 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.

These tax measures sit alongside a wider policy focus on mobilising private capital and supporting Irish companies to remain rooted in Ireland while growing internationally.

Many investors hold a wide range of different investment products.  What does Budget 2027 bring for them?

New Investment Account

A central theme of the Minister’s speech was that Ireland has a strong savings culture but comparatively low participation in investment. Budget 2027 has introduced the new Investment Account which is intended to make investing simpler, clearer and more accessible, while giving individuals greater choice in building their own long-term financial resilience.

The Account is expected to be launched by providers on 1 July 2027. It will be available to Irish-resident individuals aged 18 or over who hold a PPSN. Its key features include:

• an annual contribution limit of €12,000;
• a €50,000 tax-free threshold, with a flat annual tax of 1% on the portion of the account value above that threshold;
• the account value will be calculated daily, with the annual tax based on the average of those daily values;
• one account per person on launch;
• eligible products will initially comprise shares, bonds, investment funds and insurance-based investment products;
• the provider will manage tax reporting, administration and payment to Revenue; and
• existing retail investment tax regimes, including the eight-year deemed disposal rule, will not apply within the account.

The Account is designed to provide a straightforward, tax-efficient framework for retail investment and may appeal both to first-time and more experienced investors. As the Minister noted, its contribution limit and €50,000 threshold mean that tax is unlikely to arise in the early years for many investors. For example, where the taxable account value is €52,000, the annual tax would be €20.

Further operational detail will be set out in Finance (No. 2) Bill 2026.

Reductions in Exit tax and Capital Gains Tax

The Minister acknowledged that the Investment Account does not remove the need for wider reform of retail investment taxation. As an initial step, the rates applying to Irish-domiciled investment undertakings, Irish life assurance policies, equivalent offshore funds – including ETFs taxed under that regime – and certain foreign life assurance policies will reduce from 38% to 35% from 1 January 2027.

The deemed disposal rule continues to create challenges for investors because of its complexity and its effect on long-term investment growth. It will not apply to investments held through the new Investment Account, but the Budget publication does not announce the abolition of the rule for investments held outside that account.

Investors whose assets fall within the standard CGT regime will also welcome the reduction in that rate to 31% for disposals made on or after 7 October 2026, subject to the continuing 33% rate for development land.

Pensions

Finance (No. 2) Bill 2026 will revise the age-related valuation factors used to value defined benefit pension entitlements for Standard Fund Threshold purposes. The revised factors will apply from 1 January 2027 and may affect individuals with defined benefit pension entitlements.

Housing and property remain central policy issues. What changes does this year’s Budget hold?

The Minister characterised high rents and house prices as key drivers of the cost of living and presented the housing measures as a combination of immediate support and incentives to increase supply. Budget 2027 increased the Rent Tax Credit to €1,150 for a single claimant and €2,300 for a jointly assessed couple for 2027 and 2028. The Rent-a-Room Relief ceiling will rise from €14,000 to €16,000 from 1 January 2027 and will extend to certain designated auxiliary dwellings installed after 27 July 2026. The maximum Help to Buy relief increased from €30,000 to €35,000 with effect from 7 October 2026.

Landowners will have a further opportunity to request rezoning of land appearing on the revised Residential Zoned Land Tax map for 2027 and, in certain circumstances, to secure an exemption for that year. A new Derelict Property Tax will also be introduced. It will apply at 7% of the self-assessed value of residential and non-residential properties included on local-authority registers, with preliminary registers for the first liability year due on 1 September 2027 and the first pay-and-file deadline on 23 June 2028.

What does Budget 2027 mean for income tax and the cost of living?

The personal tax package was framed around “making hard work pay”, particularly for middle-income earners who may earn too much to qualify for State supports but still feel significant cost-of-living pressure. The standard-rate income tax band was widened by €2,500 for all earners. For a single person, the band increases from €44,000 to €46,500; for a one-income married couple or civil partnership, it increases from €53,000 to €55,500. The personal, employee and earned income tax credits were each increased by €125 to €2,125, while the Home Carer Tax Credit increased by €100 to €2,050.

The ceiling for the 2% USC rate increases by €1,600, from €28,700 to €30,300. From 1 January 2027, the USC bands will be 0.5% on the first €12,012, 2% from €12,013 to €30,300, 3% from €30,301 to €70,444 and 8% above €70,444, with the existing 3% surcharge continuing to apply to self-employed income above €100,000. The agreed employee PRSI increases – from 4.2% to 4.35% on 1 October 2026 and to 4.5% on 1 October 2027 – should also be considered when assessing the overall change in take-home pay.

The Goodbody view

Overall, Budget 2027 combines a meaningful personal tax package with targeted measures to reward entrepreneurship, broaden access to investment and support housing supply. The reduction in the standard CGT rate, lower taxes on funds and life assurance products, and the introduction of the Investment Account are positive developments for investors and business owners, while the higher CAT thresholds and housing supports provide more modest assistance to families. The practical impact of a number of measures will depend on the detailed provisions of Finance (No. 2) Bill 2026, particularly the operation of the Investment Account and the revised pension valuation factors.