Budget 2027 was announced on Tuesday 6 October. It gives most workers a little more take-home pay from January, leaves pension tax relief as it was, and introduces a new investment account that opens next July.
I've gone through it with my own clients in mind: people in the middle of their working lives, people getting close to retirement, and people who have already retired. This is what matters for each, and what I would do about it.
A bit more in your pay from January
From 1 January 2027, a single person can earn €46,500 before paying income tax at 40%, up from €44,000. For a married couple or civil partners with one income the figure is €55,500, and it is up to €93,000 where both are earning. The personal, employee and earned income tax credits each rise by €125 to €2,125, and the 2% USC band widens to €30,300.
EY calculates that a single person on €50,000 will be €691 a year better off, and a couple with a combined income of €100,000 will be €1,382 better off. Those figures allow for PRSI, which is going up regardless of the Budget. The employee rate rose from 4.2% to 4.35% on 1 October and goes to 4.5% next October.
One thing was missing from the Budget speeches: the mortgage interest tax credit. It was not extended, so 2026 is the last year you can claim it, and it is worth up to €625 this year. If you have a mortgage and qualify, claim it for 2026 and leave it out of your plans for 2027.
Pension tax relief: no change, which is good news
Nothing changed in how pension contributions are taxed. You still get tax relief on contributions at your highest rate of income tax, within the same age-based limits and the same €115,000 earnings cap. The most you can build up in pensions before extra tax applies, the Standard Fund Threshold, rises to €2.4 million in 2027 as already scheduled.
My suggestion is to decide now what happens to the extra pay. If you pay tax at 40%, a pension contribution that costs you €60 a month puts €100 a month into your fund. €60 a month is close to what the Budget gives back to a single person on €50,000.
Most people will not notice an extra €13 a week in their current account. Set up as a pension contribution in January, it becomes about €1,150 a year in your fund.
The new investment account
From 1 July 2027, anyone aged 18 or over who is resident in Ireland and has a PPS number will be able to open one investment account and put in up to €12,000 a year. It can hold shares, bonds and investment funds, including ETFs. There is no lock-in, and the eight-year deemed disposal rule does not apply inside the account.
There is no tax while the account is worth less than €50,000. Above that, you pay 1% a year on the excess, so an account worth €70,000 on average over the year would cost €200 in tax. The provider deducts it for you.
I have two cautions. The 1% is charged on the value of the account and not on what it earned, so you would pay it even in a year when your investments fell. And nobody yet knows what providers will charge, which will matter as much as the tax.
For most of the people I work with, the pension still comes first. With a pension you get tax relief on what you put in. With this account you invest money you have already paid tax on.
The account will be useful for money you expect to need before you retire, or if you are already contributing as much to your pension as the limits allow. I will write more once the legislation and the first products are published.
If you already hold investments
Two rates came down and one rule stayed.
- Capital gains tax fell from 33% to 31% for most assets sold on or after 7 October 2026. Development land stays at 33%.
- Exit tax on investment funds and life assurance policies falls from 38% to 35%. The start date has not been confirmed yet.
- The deemed disposal rule, which taxes gains in funds every eight years even if you have not sold, stays in place. The Government says it will keep it under review.
I would not sell or switch anything because of these changes alone. They are worth factoring in if you have a savings plan or investment bond coming up to an eight-year anniversary, or a sale you were already planning.
State pension and allowances
The State pension goes up by €10 a week from January. If you qualify for the fuel allowance, it rises by €5 to €43 a week, and the living alone increase goes up by €3 to €25 a week.
If you rent out a room in your home, the amount you can earn tax-free rises from €14,000 to €16,000 a year.
The State pension increase is welcome. It works out at €520 a year, so for anyone still working it does not reduce the need for a pension of your own.
Passing money on
The tax-free thresholds for gifts and inheritances went up on 7 October. A child can now receive €420,000 in total from their parents before any tax is due, up from €400,000. The threshold for brothers, sisters, nieces, nephews and grandchildren is €44,000, and for everyone else it is €22,000. Anything above the threshold is taxed at 33%, as before.
With Dublin house prices where they are, plenty of families will still be over the threshold. If this is on your mind, it is worth working out the figures for your own family.
What I would do before January
For my clients, this Budget changes less than the headlines suggest. For most people a pension is still the most tax-efficient way to save for later life, and from next summer the new account adds an option for money you will need sooner.
That leaves three small jobs between now and January.
- Decide where the extra take-home pay goes, and set it up before it disappears into day-to-day spending.
- Check whether you are using the pension tax relief available to you.
- Look at what any existing investments will cost you in tax, and when.
If you would like to go through any of this for your own circumstances, get in touch.
The measures described here were announced on Budget day and will be confirmed in the Finance Bill, so some details may change. This article is general information and is not personal financial advice. Future Financial Planning Ltd. is regulated by the Central Bank of Ireland.