Personal Tax

Key measures for personal tax

In the area of income tax, the following measures were announced in Budget 2027: 

• The income tax standard rate band (20%) will increase by €2,500 to €46,500
• Increase in the Personal, PAYE and Earned Income tax credits by €125. Home carer tax credit will increase by €100. The rent tax credit increased to €1,150 for single individuals and €2,300 for couples.
• The 3% USC rate band has increased from €28,700 to €30,300.
• Rent-a-room relief will increase to €16,000.
• In relation to defined benefit pension, the age-related valuation factors which apply to the Standard Fund Threshold regime will be amended. These new valuation factors will come into effect on 1 January 2027 and details will be set out in the Finance Bill.
• A new Investment Account was announced that provides for a €50k tax free threshold and a flat rate of 1% above the €50k threshold. There is no minimum contribution to invest in the account but a maximum contribution of €12,000 per annum. There will be no tax reporting obligations and no deemed disposal rule, unlike those which apply to Irish regulated and offshore regulated funds. This account will open to the public on 1 July 2027.
• The rate that applies to Irish regulated funds, their offshore equivalents and foreign life assurance products will be reduced to 35% from 38%. The government committed in the budget to removing barriers to investments, but no further details were announced in terms of timing.

Who will be affected and when?

The measures announced should put more money back in the hands of employees and self-employed taxpayers in 2027 following the increases to the standard rate bands and tax credits. Investors will benefit from the reduction in the rate that applies to Irish and offshore regulated funds in 2027. 

What now?

Employees should check their tax credit certificates and payslips when the 2027 changes take effect, particularly where a change in family circumstances could affect the credits available. Self-employed taxpayers should take the revised band, Earned Income Tax Credit and USC threshold into account when estimating their tax position. Homeowners currently claiming Rent a Room Relief can claim up to €16,000 from 2027 and should consider the current rental income in place.

Deloitte's view on Budget 2027 measures

The income tax package offers welcome relief to working households. Raising the standard rate band addresses the point at which middle-income earners begin paying the higher rate, while increasing credits provides support across a broader range of earnings. Targeted relief for renters and people letting rooms may also help with day-to-day pressures.

The investment measures deserve attention. Reducing the applicable rate on qualifying Irish and equivalent offshore funds to 35% improves their tax treatment. However the Budget did not, in simplifying taxation of investments, go as far as to remove the eight-year deemed disposal rule or introduce loss relief on funds which could be offset against chargeable gains - moves which would align tax treatment with most other types of investment.

The Investment account provides a stepping stone for taxpayers to begin investing without the worry of reporting investments for tax purposes, and could make investing more straightforward by placing the routine tax administration requirements on providers, rather than the investor. Its structure is materially different from the existing fund tax rules: the proposed 1% charge is based on account value above a threshold, not simply on gains realised. That makes it important to compare the full investment proposition, rather than tax rates alone.

Our view is that the Budget broadens personal financial choices without making one option right for everyone. Its value to each client will depend on earnings, investment holdings, time horizon and appetite for risk. Clear implementation guidance and final legislative detail will be essential to informed decisions.

Overall, Budget 2027 moves towards easing some household costs. Its impact will vary with income, family circumstances and access to particular reliefs.