Budget 2027 Ireland: Key Tax Changes for PAYE Workers

Budget 2027 took place on Tuesday 6 October 2026. Our qualified tax experts here at Irish Tax Rebates have been comprehensively reviewing the Budget 2027 announcements and their implications for our clients. Most of these changes take effect from 1 January 2027.

Contents

• Budget 2027 Highlights for PAYE Workers
• Income Tax
• Universal Social Charge (USC)
• Personal Tax Credits
• Home Carer Tax Credit
• Rent Tax Credit
• Tuition Fees Tax Relief
• Help to Buy Scheme
• Inheritance Tax
• Additional Budget Updates
• Are You Owed Tax From Previous Years?
• FAQs

Budget 2027 Highlights for PAYE Workers

• The standard rate cut-off point for the 40% tax band is to be increased, bringing the entry point from €44,000 to €46,500.
• The Rent Tax Credit will increase from €1,000 to €1,150 for single taxpayers and from €2,000 to €2,300 for jointly assessed couples.
• The upper limit of the second USC band is to be increased from €28,700 to €30,300. The third band rate remains at 3%.
• The Help to Buy Scheme will increase to up to €35,000.
• Inheritance tax thresholds increase for Group A from €400,000 to €420,000, Group B to €44,000 and Group C to €22,000.
• €125 increase in the Personal Tax Credit and Employee Tax Credit to €2,125.
• €100 increase in the Home Carer Tax Credit from €1,950 to €2,050.
• The disregard for tuition fees tax relief is now aligned with the Student Contribution Fee.
• Employee PRSI increase again in October 2027 to 4.50%.
• Capital Gains Tax reduced from 33% to 31%

Income Tax

Finance Minister Simon Harris has announced a change to the income tax bands, with an increase in the standard rate income tax cut-off point of €2,500.

• From January, the rate band for the 40% top rate of income tax will widen by €2,500, changing from €44,000 to €46,500.
• If you are a single parent in receipt of the Single Parent Tax Credit, your rate band will increase from €48,000 to €50,500.
• Married couples/civil partners, one income: increase from €53,000 to €55,500, with the balance taxed at 40%.
• Married couples/civil partners, two incomes: increase from €88,000 to €90,500, with the balance taxed at 40%.

“This will mean an extra €500 in tax savings for the 2027 tax year for people paying the 40% tax rate.” – Claire Murphy, Chartered Tax Advisor, Irish Tax Rebates

Universal Social Charge (USC)

From January, USC will be calculated as:

• Income up to €12,012 will pay USC at 0.5%.
• Income from €12,013 to €30,300 will pay USC at 2%.
• Income from €30,301 to €70,044 will pay USC at 3%.
• Income over €70,044 will pay USC at 8%.

USC is a tax payable on your gross income. Depending on your circumstances, you pay USC at the standard rate or the reduced rate.

Claire advises that: “This is part of the continuing reduction by the Government of the USC rates. For example, there will be tax savings for those earning €40,000 of €16 compared to 2026’s USC rates, very small reduction, but will help those on less than €30,300.”

Personal Tax Credits

The Personal Tax Credit and Employee (PAYE) Tax Credit will each increase by €125, from €2,000 to €2,125, allowing for a tax saving of €250 for PAYE workers.

Claire advises that: “This also means that people earning less than €21,500 will be below the threshold for paying income tax, and keeps them in the lower USC rate too, allowing for a positive increase in the minimum wage for these workers.”

Home Carer Tax Credit

The Home Carer Tax Credit is being increased from €1,950 to €2,050, resulting in a tax saving of €100.

Rent Tax Credit

The Rent Tax Credit is increasing by €150 for 2027. The credit will now be worth €1,150 for a single person and €2,300 for a jointly assessed couple.

“This is a great boost for those renting. The credit will now be worth €1,150 for a single individual, and for married couples the credit will now be worth €2,300 for 2027. We also strongly encourage those who have children in 3rd level courses and are paying for their accommodation to claim this credit – rent a room and digs type arrangements are also recognised tenancies for those students.” – Niall Brennan, Chartered Tax Adviser and Associate Chartered Accountant, Irish Tax Rebates

Tuition Fees Tax Relief

Simon Harris has stated that the disregard for income tax relief on third-level fees will be aligned with the Student Contribution Fee rate, which is €2,500.

“This is a positive change. The contribution had come down in recent years, which helped families, but it omitted the tax relief that should be available to families paying for two or more children.” – Claire Murphy, Chartered Tax Advisor, Irish Tax Rebates

Help to Buy Scheme

The Help to Buy Scheme will increase by €5,000 to up to €35,000 for first-time buyers.

Inheritance Tax

Capital Acquisitions Tax (CAT), also known as inheritance tax or gift tax, has increased thresholds across all three groups:

• The Group A threshold (parent to child) has increased from €400,000 to €420,000.
• The Group B threshold (grandparents, siblings, aunts, uncles etc.) has increased from €40,000 to €44,000.
• The Group C threshold (all others) has increased from €20,000 to €22,000.

Capital Gains Tax

Capital Gains Tax (CGT), has decreased from 33% tax on gains to 31%:

This is effective from the 07/10/2026 on any gains of disposed assets such as non-principle private residence properties, or shares. These are the most common disposals where CGT applies.

The personal exemption still remains at €1,270.

Are You Owed Tax From Previous Years?

Budget changes apply from 2027, but you can still claim back tax you overpaid in the last four years. Right now, that means 2022, 2023, 2024 and 2025. Common unclaimed items include the Rent Tax Credit, medical and dental expenses, flat rate expenses for your job, tuition fees and the Mortgage Interest Tax Credit.

Irish Tax Rebates has been helping PAYE workers claim back what they’re owed since 2009, and we review more than 250,000 clients’ tax every year. Our qualified tax accountants check every credit and relief you’re entitled to, so you don’t miss a cent.

Find Out What Tax Credits You Can Claim Today

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