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Income Tax Rates, Bands, Tax Credits and Exemption Limits
As flagged in the media in advance, the standard rate band (the amount up to which an individual pays income tax at 20%) will increase from €44,000 to €46,500 for a single individual, with corresponding increases for married couples, with effect from 1 January 2027.
This will reduce the income tax liability of a single individual earning €46,500 or more by €250 per annum and of a married couple earning €46,500 or more each by €500 per annum.
The Personal Tax Credits, Employee Tax Credit (PAYE Credit) and Earned Income Credit for the self-employed will increase by €125 each from €2,000 to €2,125 commencing on 1 January 2027.
This will reduce the income tax liability of a single individual earning €46,500, or more, gross per annum (who would be entitled to either the PAYE Credit or Earned Income Credit) of €250 per annum and €500 per annum for a married couple earning €46,500, or more, gross each.
This will mean that a single individual (who is entitled to the full Personal Tax Credit and either the PAYE credit or Earned Income Credit) earning at least €46,500 gross per annum will be €766 better off (taking into account the changes to the USC bands mentioned further below) in 2027 compared to 2026. However, the increases in the PRSI rates mentioned below will eat into this overall saving slightly.
The Home Carer Tax credit (a credit payable where one spouse cares for a dependent person, including a child in respect of whom Child Benefit is payable, in the family home) will also increase by €100 per annum with effect from 1 January 2027.
The rate of tax that applies to Irish domiciled funds and life assurance policies and equivalent offshore funds and foreign life policies will reduce from 38% to 35%.
This change will be effective from 1 January 2027.
Minister Harris also stated that the government will continue to work on the wider funds regime including the 8 year deemed disposal provisions and that he intends to make further progress on “removing barriers to investment”.
However, what this means in practice, and when any changes might be introduced, remains to be seen.
Pay Related Social Insurance (PRSI) & Universal Social Charge (USC)
While not announced as part of today's Budget measures, the scheduled increases in PRSI rates are still due to take effect in accordance with existing legislation.
This is important to bear in mind as both the employee and employer PRSI rates increased to 4.35% and 11.40% respectively from 1 October 2026, and will increase again from 1 October 2027 to 4.5% and 11.55% respectively.
The employer PRSI threshold will be increased with effect from 1 January 2027 from €552 to €600 per week which will represents a saving for employers in respect of the cost of engaging employees who fall below this threshold.
The 2% USC band will increase by €1,600 so that it applies on income of €12,013 to €30,300. This will result in a modest annual saving of just €16 for a single individual earning over €30,300 gross per annum and €32 for a married couple earning at least €30,300 gross per annum each.
The changes to the USC bands are effective from 1 January 2027.
Rent Tax Credit
The rent tax credit will be increased from its current level of €1,000 for a single individual to €1,150 and from €2,000 to €2,300 in the case of a jointly assessed taxpayer.
Rent-a-Room relief
The amount up to which an individual can earn from renting out a room in their own home will increase from €14,000 to €16,000 per annum with effect from 1 January 2027.
The relief will also be extended retrospectively to designated auxiliary dwellings from 27 July 2026. These are generally detached residential units, commonly referred to as "granny flats", situated on the same site as the principal private residence.
Personal Investment Account
The Minister finally announced details of the new Personal Investment Account which will be launched by providers on 1 July 2027 as part of the work to encourage and support retail investment in Ireland.
The account will be available to Irish resident individuals, aged 18 and over, who hold a PPSN.
The account will include a flat rate 1% tax applied to the value of the account above the €50,000 tax free threshold, with an annual contribution limit of €12,000.
The value of the account will be calculated daily, with the average of the daily values being used for the purpose of calculating the tax due, if any.
On launch, only one account will be allowed per person, with consideration being given in future years to whether provision can be made for multiple accounts.
Eligible providers will be MiFID-authorised service providers, regulated fund managers, and insurance companies.
On introduction, individuals can chose from a range of eligible products to be held in the account which will be limited to shares, bonds, investment funds and insurance-based investment products.
Existing regimes in place for taxation of retail investment, including the deemed disposal rule, will not apply to the new account. All tax reporting, tax administration and payment of any tax due to Revenue will be managed by the provider, thereby removing the requirement for the individual investor to calculate or return any tax due. Further details will be set out in Finance (No. 2) Bill 2026.
Relief for Investment in Corporate Trades
The Minister confirmed that he intends to extend the Employment Investment Incentive Scheme (“EIIS”), Start Up Relief for Entrepreneurs (“SURE”), Start Up Capital Incentive (“SCI”) and the Relief for Investment in Innovative Enterprises subject to the new EU State Aid regulation. All of these reliefs had been due to expire on 31 December 2026.
Standard Fund Threshold
No changes were announced to the scheduled increases in the Standard Fund Threshold, which were already legislated for in Finance Act 2024. However, Minister Harris indicated that the Government intends to review the age-related valuation factors used in valuing defined benefit pension rights.
Third Level Tuition Fees Relief
The government have stated that they are committed to reducing the Student Contribution Fee in relation to third level education.
Therefore, in order to ensure that the income tax relief in respect of third level tuition fees operates as it should, Minster Harris has stated that the amount disregarded for the purposes of this tax relief will be brought into line with the Student Contribution fee.
Succession Farm Partnerships
The income tax credit available in respect of qualifying Succession Farm Partnerships is due to be increased with effect from such partnerships registered from 1 January 2027 from €5,000 per annum to €10,000 per annum for the first 5 years.
The Minster also stated that he will remove the current three-year waiting period (for applications made from 1 January 2027 onwards) before a qualifying transfer of farm assets can be made under a Succession Farm Partnership, facilitating earlier succession planning.
Childcare Services Income Tax Relief
The exemption threshold under the Childcare Services Relief scheme will increase by €5,000 per annum from €15,000 to €20,000 per annum. The limit on the number of children that can be cared for by a qualifying childminder will also be removed subject to complying with the relevant regulations.
Microgeneration
Where households sell electricity back to the national grid (most commonly where they have solar panels on their home), they can earn up to €400 per annum free from Income tax, USC and PRSI. This tax free amount is due to increase by €200 per annum with effect from 1 January 2027.