Budget 2027 has landed, bringing a blend of tax cuts, targeted reliefs, and measures designed to put more money back into people’s pockets while maintaining Ireland’s competitive business landscape.
From a Corporation tax freeze and income tax changes to reductions in Capital Gains Tax and updates to inheritance tax thresholds, there are plenty of measures that individuals, families and businesses should have on their radar.
Below, Cooper Parry’s Northern Ireland team has broken down the key announcements from Ireland’s Budget 2027 and what they could mean for you.
Budget 2027: What Businesses Need to Know
Corporation Tax remains unchanged
For businesses, one of the most significant announcements may be what didn’t change at all.
Ireland’s 12.5% Corporation Tax rate remains untouched, providing continued certainty for domestic businesses and international investors operating in the country.
The decision reinforces Ireland’s position as one of Europe’s most attractive locations for business investment and growth alike.
Fuel excise reductions extended
The Government confirmed an extension of the temporary reduced fuel excise rates until 28 February 2027.
After that point, rates will increase gradually across four phases, with full restoration expected by the end of June next year.
Businesses that rely heavily on transport and logistics should continue monitoring fuel costs throughout 2027.
Carbon tax freeze provides certainty
In another energy-related measure, carbon tax on kerosene and natural gas will remain reduced at €48.50 per tonne of CO₂ until 2030.
The move provides greater certainty for energy-intensive sectors and businesses managing long-term operating costs.
Higher VRT for more polluting vehicles
Vehicle Registration Tax (VRT) for higher-emission vehicles in bands 3 to 20 will increase by 1%.
The change represents another step in encouraging lower-emission vehicle adoption and may influence future fleet investment decisions for businesses.
Budget 2027: Key Personal Tax Changes
More workers will pay less income tax
One of the headline grabbers is an increase in the income tax threshold at which individuals move into the higher 40% tax band.
For a single person, the threshold will increase from €44,000 to €46,500, meaning more income can be taxed at the lower rate before higher-rate tax kicks in.
Combined with other tax changes announced in the Budget, this should provide some welcome relief for employees across Ireland.
Tax credits increase again
The Government has also increased the:
- Personal Tax Credit
- Employee Tax Credit
- Earned Income Tax Credit
By €125 each.
While not transformational on their own, these increases will help reduce overall tax liabilities for many workers and self-employed individuals.
USC changes deliver further support
The upper limit of the 2% Universal Social Charge (USC) band will increase by €1,600 to €30,300.
This means more earnings can be taxed at the lower USC rate before moving into the next band.
New tax-efficient savings account launches in 2027
Another notable new measure is the introduction of a Personal Investment Account, expected to launch in July 2027.
Under the scheme:
- Individuals can save up to €12,000 annually
- Funds up to €50,000 will be tax free
- Balances above €50,000 will be subject to a flat 1% tax rate
The move is designed to encourage personal saving and investment while providing a more attractive alternative to traditional savings options.
Capital Gains Tax reduced
In a significant announcement for investors and business owners, the rate of Capital Gains Tax (CGT) will reduce from 33% to 31%.
The reduction could make asset disposals, investment exits and business transactions more tax efficient, although the wider implications will depend on individual circumstances.
Inheritance and gift tax thresholds increase
Budget 2027 also delivers changes to Capital Acquisitions Tax (CAT), with all group thresholds set to increase.
The news should allow more wealth to be transferred through gifts and inheritances before triggering tax charges.
Rent-a-Room Relief expanded
The tax-free threshold under Ireland’s Rent-a-Room Relief scheme will increase to €16,000.
This could encourage more homeowners to participate in the scheme while helping to increase accommodation availability.
Higher costs for tobacco and vaping products
As expected, Budget 2027 included further increases to excise duties:
- A packet of 20 cigarettes will increase by €1
- Vape duty will increase by 20 cent per millilitre
Minimum wage rises
The national minimum wage will increase by 79 cent to €14.94 per hour, providing a boost for many lower-paid workers across Ireland.
What Does Budget 2027 Mean for Ireland?
With so many announcements holding tax rates, reducing them or designed to stimulate saving activity, Budget 2027 is something of a giveaway.
For businesses, stability is a core theme. The retention of Ireland’s 12.5% Corporation tax rate, alongside targeted measures around fuel and energy costs, provides a degree of certainty in an otherwise challenging economic environment.
For individuals, the focus is firmly on easing tax pressures through increases to income tax thresholds, tax credits and USC bands, while introducing new opportunities to save and invest tax efficiently.
Neil Norman, Tax Partner at CP shared his thoughts on Budget 2027:
“Once again, Ireland is showing its position as a wealthy, European country. Able to share its fiscal surplus with its citizens through a raft of tax cuts, threshold increases, incentives and stimulus packages, it stands in stark contrast to its ‘Great’ neighbour whose Budget we anticipate to strike a different tone.
Preservation of the 12.5% corporate rate, coupled with new savings plans and extensions to inheritance taxes means that accumulation of personal wealth is being encouraged.”
As always, the impact of these measures will depend on your individual circumstances. So, if you’re wondering how the latest changes could affect you, your family or your business, Cooper Parry’s Irish tax specialists are here to help.
