Budget 2027: What It Means for Your Pay, Rent and Heating Bills

A €1.3 billion income tax package, a cut in carbon tax on home heating oil and gas, and reduced fuel excise rates extended until 28 February 2027 are among the main measures in Budget 2027, presented to the Dáil on Tuesday, 6 October 2026.

Minister for Finance Simon Harris and Minister for Public Expenditure Jack Chambers presented the Budget, the second in this Government's term. Minister Harris set out the tax measures, and Minister Chambers is to give the details on spending.

Minister Harris said the Government had listened on income tax.

Simon Harris, Minister for Finance:

"I want people at home to know that we’ve heard loud and clear the importance of a personal income tax package."

Income Tax and USC

The point at which you start paying the higher rate of income tax, known as the Standard Rate Cut Off Point, is rising by €2,500 to €46,500. There are proportionate increases for married couples and civil partners.

The Personal, Employee and Earned Income Credits are increasing by €125, and the Home Carer Tax Credit is rising by €100.

According to the Department of Finance, someone earning €50,000 a year will pay over €700 less in income tax and USC. A couple with two incomes earning €100,000 a year between them will pay €1,500 less.

The entry threshold for the USC 3 per cent band is also increasing by €1,600, from €28,700 to €30,300. Minister Harris said this takes account of minimum wage changes, which the Minister for Enterprise, Tourism and Employment will outline in detail.

Heating Your Home This Winter

Minister Harris said that as winter approaches, the increase in the price of home heating oil and natural gas represents a heavy burden for many families who may have no easy alternatives.

Carbon tax on kerosene and natural gas was scheduled to increase twice between now and May 2027, from €63.50 per tonne of CO2 to €78.50 per tonne by 1 May 2027. Instead, both rates will be reduced to €48.50 per tonne and held at that level for the lifetime of the Government.

Simon Harris, Minister for Finance: "Carbon tax on home heating oil and gas is being reduced and will not increase again in the lifetime of this Government."

Minister Harris also said there will be no increase in any form of tax at the pump or in the home during this winter period.

At the Pump

The temporary reduced fuel excise rates, which had been due to run until November, will now remain fully in place until 28 February 2027.

After that, excise will be restored in four phases, with full restoration not happening until 30 June 2027. The reduced NORA levy is being extended until 31 December 2026, and the enhanced Diesel Rebate Scheme until the end of December 2026.

Renters and Homeowners

The Rent Tax Credit, which the Government says helps around 400,000 people every year, is going up by €150. That brings it to €1,150 for single claimants and €2,300 for couples.

First-time buyers can now claim up to €35,000 under the Help to Buy scheme, an increase of €5,000, with immediate effect.

The tax-free amount a homeowner can earn under the Rent a Room scheme is rising from €14,000 to €16,000. The relief is also being extended to newly installed Detached Auxiliary Dwellings of between 32 and 45 square metres, backdated to 27 July, when new planning rules making it easier to add detached accommodation in the grounds of a home came into force.

Families and Students

Childminders will benefit from an increase in the Childcare Services Relief tax exemption, up by €5,000 to €20,000, with the limit on the number of children who can be minded under the relief removed. Further measures on childcare costs are to be outlined by Minister Chambers.

For parents of college students, the disregard for income tax relief on third level fees is being aligned with the Student Contribution rate, which the Government says will give a further saving to parents.

A New Way to Save and Invest

A new Irish Investment Account will open on 1 July 2027. There will be a tax-free threshold of €50,000, with a flat tax of 1 per cent on the value of the account above that amount.

You can put in up to €12,000 a year, with no minimum contribution. Using the Department's own example, an account worth €52,000 would pay just €20 in tax for that year.

The account will sit outside capital gains tax, dividend withholding tax, investment undertaking tax and life assurance exit tax, and the deemed disposal rule will not apply. The provider, not the account holder, will deal with Revenue in the normal running of the account.

Separately, the rates of tax that apply to investors in Irish and equivalent offshore funds, and Irish and foreign life assurance products, are being cut from 38 per cent to 35 per cent from 1 January 2027. This includes Investment Undertaking Tax and Life Assurance Exit Tax.

Cars, Cigarettes and Selling Power to the Grid

Vehicle Registration Tax relief for electric vehicles is being extended until 31 December 2028, while VRT rates are rising by 1% on more polluting cars in bands 3 to 20.

The excise duty on a pack of 20 cigarettes is going up by €1, with a pro-rata increase on other tobacco products. Duty on e-liquid products is rising by 20 cents per millilitre.

For households who sell electricity back to the grid, the income tax disregard for micro-generation income is rising by €200, from €400 to €600. Reviews of the Cycle to Work and TaxSaver schemes are also on the way.

Gifts, Inheritances and Business

The tax-free thresholds for gifts and inheritances are rising. The Group A threshold goes from €400,000 to €420,000, Group B from €40,000 to €44,000, and Group C from €20,000 to €22,000.

The standard rate of Capital Gains Tax is falling from 33 per cent to 31 per cent. Employers will see the employer PRSI threshold rise from €552 to €600 per week for 2027, and €15 million has been announced to support rural pubs.

A new Derelict Property Tax will be charged at 7 per cent, with preliminary registers of derelict properties to be published on 1 September 2027.

The Department of Finance expects a surplus of €6.7 billion this year and €9.5 billion in 2027. You can read the full statement by Minister Harris, both Ministers' speeches, the Your Guide to Budget 2027 booklet, and all Budget 2027 documents on gov.ie.