Global Mobility & Employment

Key measures for income and employment tax 

From an income and employment tax perspective there were a small number of key measures in the Budget 2027:

• The income tax standard rate cut off point was increased by €2,500 to €46,500 for a single individual and proportionate increases for married couples and civil partners.
• The Universal Social Charge (USC) is to be amended so that the ceiling for the second-rate (2%) band will increase by €1,600 from €28,700 to €30,300.
• An increase of €125 to the personal tax credit, employee tax credit and earned income credit was announced and an increase of €100 to the home carer’s tax credit.
• A change to employer’s Enhanced Reporting Requirements (ERR) has been announced with effect from 1 January 2027 whereby employer’s can continue with real time reporting or complete a monthly return by 14th of the following month.
• A new savings investment account will be available from 1 July 2027 to Irish residents aged 18 and over who have a PPSN. An annual limit of €12,000 on contributions will apply. The account will include a flat rate 1% tax applied to the value of the account above a €50,000 tax free threshold.

Deloitte's view on Budget 2027 measures

Budget 2027 brings changes to personal tax bands, personal tax credits and a small change to the USC bands to align with the increase in the minimum wage (which will increase to €14.94 per hour from 1 January). While these changes are welcome, they do not go far enough. At a marginal rate 52.35%, Irish employees continue to have one of the highest personal tax burdens in the OECD.

The amendment to ERR requirements is welcome as it will offer flexibility to employers. The requirement to report these non-taxable expenses on or before payment was never practical. However, despite extensive opposition to the measure the challenges for employers were not recognised when the requirement was introduced in 2024. Many employers have invested time and money to implement processes to seek to meet the current reporting requirements.

It is disappointing that there has been no change to the small benefit exemption. The limit on the number of benefits (currently five) appears to serve no clear purpose other than to create administrative burden and additional risk for employers in meeting their EER obligations. Policy should focus on the maximum value (€1,500) per tax year and not the quantum. It would have been helpful if this was amended at the same time as the change to the ERR timing.

It has been long announced that there would be a new savings investment regime introduced to encourage investment. The Minister announced the new account will be launched from 1 July 2027 and 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. As the requirement is based on residence, age and holding a PPSN these accounts should also be available to non-Irish employees working in Ireland and may be attractive from a tax perspective.

The Special Assignee Relief Programme is a valuable relief that encourages skilled individuals to relocate to Ireland by providing an income tax exemption for 30% of earnings in excess of €125,000 up to a cap of €1m. It was extended for 5 years to 31 December 2030. However, this sunset provision creates uncertainty, and we had recommended in our pre-Budget submission that it would be permanently coded into the legislation. Furthermore, we had suggested amendments such as extending the relief to allow direct hires into Ireland to qualify, alongside extending SARP relief to Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) for employees and employer’s PRSI.

Whilst not mentioned in the budget employers should note PRSI rates were increased on 1 October 2026 by 0.15%, which increased employee PRSI to 4.35% and employer PRSI to 11.40%. There will be further increases of 0.15% from 1 October 2027 and 0.2% from 1 October 2028 respectively.

The Minister announced a review of the Cycle to Work scheme in 2027 to determine ways to boost take up among all workers. He also said there will be a comprehensive review of the TaxSaver scheme for commuters on the basis that working patterns have changed, and the scheme should reflect that. We await the outcome of these reviews. As these schemes are approved salary sacrifice arrangements, they offer employer PRSI savings for the employer so any enhancements will be welcome.