Reduce Capital Gains Tax to 20% and increase the Standard Rate Income Tax Cut-Off Point to €50,000, Deloitte’s 2027 pre-budget submission urges

Deloitte Ireland has urged the Government to reduce the rate of Capital Gains Tax (CGT) to 20%, and to increase the Standard Rate Income Tax Cut-Off Point to €50,000 over the next three years.

It has also called for bold changes to the R&D tax credit regime, the doubling of the CGT Entrepreneur Relief lifetime limit, and the introduction of a simple, incentivising and economically valuable savings and investment scheme.

The recommendations are made in Deloitte’s Pre-Budget 2027 Submission, Scaling and Staying, which has been submitted to the Department of Finance.

CGT reduction to 20%

Deloitte’s pre-budget submission states that the current 33% rate of CGT is internationally uncompetitive and creates a ‘lock-in effect’ that discourages asset sales, delays business succession and restricts capital mobility.

Reducing the rate to 20% would, Deloitte says, unlock capital for reinvestment and strengthen Ireland’s Domestic Direct Investment (DDI).

This is the second time Deloitte has called for a reduction to the headline CGT rate. It states that given CGT receipts represent only around 2% of the overall tax yield, a reduction in the headline rate would have a minimal impact on fiscal sustainability while promoting economic efficiency.

Increase in Standard Rate Cut-Off Point

Deloitte recommends increasing the Standard Rate Cut-Off Point (SRCOP) from €44,000 to at least €50,000 over the next three years to address a disproportionate tax burden on middle-income earners.

The pre-budget submission says a competitive and effective tax policy is crucial for Ireland to attract and retain talent in an increasingly digitalised and mobile world.

Ireland’s top personal income tax rate is among the highest in the EU. There was no increase in last year’s budget, and only modest increases in prior years, coupled with the incremental increases to the PRSI rates through to 2028. This means that individuals will pay more in combined tax and social security in 2026 than in 2025.

Data from the Central Statistics Office shows that average weekly earnings have increased by 44.9% in the last 10 years. However, the SRCOP has increased by just 30% over the same period. As a result, the SRCOP is currently less than the average income in Ireland, pushing more individuals into the higher tax bracket.

Deloitte also urges the Government to consider reforming the personal tax regime so that the combined income tax, USC and PRSI rate for workers does not exceed 50%.

It says such measures would help maintain Ireland’s competitiveness, attract investment and foster long-term economic stability.

Bold changes to the R&D tax credit scheme

While a cut in Capital Gains Tax will help increase Domestic Direct Investment, Deloitte says Ireland also needs to continue to grow and retain Foreign Direct Investment (FDI).

The pre-budget submission states that the country’s R&D tax credit regime has been linked to the attraction and retention of a high level of FDI in recent decades, contributing to productivity gains and economic growth.

Notwithstanding the success of the regime since its inception, Deloitte says that economic headwinds created by further changes to the international tax system, deglobalisation, and barriers to domestic growth will continue to be present.

The submission states that it is crucial to focus on creating and developing intellectual property within Irish companies. It says this can be achieved through changes to the R&D regime so that:

• Related party expenditure is within the scope of the R&D tax credit.
• The limits on R&D expenditure outsourced to universities or higher education institutions are removed.

To support innovation, Deloitte also recommends the introduction of a new digitisation tax credit and an investment tax credit.

Doubling CGT Entrepreneur Relief lifetime limit to €3 million

Deloitte recommends raising the CGT Entrepreneur Relief lifetime limit from €1.5 million to €3 million to better position Ireland on the global stage and support the Government’s goals for indigenous business growth and innovation.

The limit was increased from €1 million to €1.5 million in 2025, but Deloitte says it still restricts high-growth businesses and risks losing entrepreneurs to more favourable tax jurisdictions.

It would demonstrate Ireland’s dedication to supporting businesses at every stage and encourage reinvestment of proceeds into new ventures, generating a positive multiplier effect.

It would also position Ireland as Europe’s leading environment for high-growth entrepreneurs and complement existing tax measures such as the R&D tax credit.

Tax incentives for strategic housing supply

The pre-budget submission states that tax policy and targeted incentives can play a pivotal role in the future development and delivery of housing for purchasers and renters.

It states that despite the introduction of specific incentives and reliefs in the Finance Act 2025, Ireland continues to face challenges in meeting its annual and broader housing delivery targets.

To help address this, the submission urges the introduction of further tax incentives and reliefs, which would be targeted, time-bound, regularly monitored, and transparent, to stimulate the construction, repurpose, or renovation of various housing types.

Deloitte recommends considering tax incentives and reliefs for student accommodation, employer-provided accommodation, co-living spaces, nursing homes, and independent living accommodation to diversify housing supply and meet varied market demands.

Three principles for Ireland’s savings and investment scheme

The pre-budget submission welcomes comments by Tánaiste and Minister for Finance Simon Harris TD on the planned introduction of a savings and investment scheme.

In preparation for an anticipated launch date of 2027, Deloitte undertook an analysis of similar schemes elsewhere, including the UK’s ISA, France’s Livret A, Sweden’s ISK, and Canada’s TFSA.

Based on the findings of this research, Deloitte recommends the following key features for any scheme in Ireland:

1. Simplicity: A straightforward, easy-to-understand product encourages broad participation across all demographics, including younger savers. Ireland’s current tax regime surrounding investment products in Ireland is currently overly complex.
2. Incentive: To succeed, the scheme must incentivise Irish households to move savings from deposit accounts into the new savings and investment vehicle. The tax policy should provide clear, easily understood benefits and deliver genuinely valuable returns.
3. Economic growth: The scheme must be designed to facilitate channelling household savings into productive sectors of the economy, supporting sustainable growth and job creation.

Commenting on Deloitte Ireland’s Scaling and Staying pre-budget submission, Daryl Hanberry, Head of Tax & Legal, said: