Everything you need to know about Budget 2027

The Budget continues the Government's focus on boosting disposable income while also introducing measures aimed at encouraging greater participation in long-term savings and investment. The key tax measures include:

• Increases to personal income tax bands and credits.
• Introduction of the new Irish Investment Account, effective from 1^st July 2027, featuring a €50,000 tax-free threshold, a 1% annual tax on values above this threshold, and an annual contribution limit of €12,000.
• Reductions in certain investment-related tax rates, including exit tax and Capital Gains Tax (CGT).
• Changes to Standard Fund Threshold (SFT) valuation factors, affecting pension benefit testing.
• Increased Capital Acquisitions Tax (CAT) group thresholds for gifts and inheritances.

Investment accounts, life policies, exit tax and savings 

New Investment Account 

Budget 2027 confirmed the details of the Government’s new Investment Account (previously referred to as the Personal Investment Account or Savings and Investment Account). It will be available from providers from 1^st July 2027, with the legislative framework set out in Finance (No. 2) Bill 2026.

Key features:

• Tax treatment: The account is outside the existing regimes for retail investment – no exit tax, no Capital Gains Tax, no dividend withholding tax and no eight-year deemed disposal on investments held in the account. Instead, a final liability tax applies.
• Tax-free threshold of €50,000: A flat annual tax of 1% applies only to the value of the account above €50,000 (e.g. on an account valued at €52,000, tax of €20). The tax is charged on value, not gains, so it can arise in a year when investments fall in value. The value is calculated daily and the average of the daily values is used to calculate any tax due.
• No minimum contribution.
• Maximum annual contribution limit of €12,000: Equivalent to €1,000 a month. As the annual limit is well below the threshold, the Minister noted it is extremely unlikely tax will be due in the first few years, even with maximum contributions. The limit will also restrict the pace at which existing savings can be moved into the account.
• Eligibility: Irish resident individuals aged 18 and over who hold a PPSN. Only one account per person is allowed at launch; multiple accounts may be considered in future years.
• Eligible assets: On introduction, limited to shares, bonds, investment funds (including ETFs) and insurance-based investment products. Derivatives and crypto-assets are excluded, and cash may only be held temporarily pending investment, with no return paid on cash.
• Access: No minimum holding period or lock-in, with full flexibility to withdraw. Transfers between providers are to be facilitated, where possible, on a tax-neutral basis, although in-specie transfers may not always be possible. The account is for new contributions within the annual limit; existing investments cannot simply be moved in outside the €12,000 annual limit.
• Providers and administration: Eligible providers will be MiFID-authorised service providers, regulated fund managers and insurance companies. The provider will handle all tax reporting, administration and payment of tax to Revenue, so investors will not need to engage with Revenue or file a return for the account.

Will Zurich offer an Investment Account? Yes, Zurich will offer a Investment Account from day one.

Ireland’s new Investment Account is here to help you grow your wealth over the long-term. Following the Budget 2027 announcements, we now have a much clearer picture of how the new account will work. You can watch our video and blog on how the Investment Account will work.

Exit tax, deemed disposal and the life assurance levy

• The exit tax rate is reduced from 38% to 35% for individual investors in life assurance policies (Life Assurance Exit Tax), Irish domiciled funds (Investment Undertaking Tax), equivalent EU/EEA/OECD offshore funds (including ETFs) and certain foreign life assurance policies. The rates for companies, personal portfolio life policies and personal portfolio investment undertakings are unchanged. The effective date will be confirmed in Finance (No. 2) Bill 2026. The rate remains above the industry-sought alignment with CGT.
• The eight-year deemed disposal rule has not been changed for investments outside the new Investment Account. The Government’s Roadmap for the Taxation of Retail Investment identifies a review of deemed disposal as an option for Budget 2028 and beyond. Finance (No. 2) Bill 2026 will also introduce a new section for Irish domiciled funds (including Irish ETFs) held in a recognised clearing system, to which the 35% rate will apply.
• No change was announced to the 1% Government levy on life assurance premiums, which continues to apply, including to regular-premium savings policies.

Capital Gains Tax is reduced from 33% to 31% for disposals made on or after 7^th October 2026 (the 33% rate on development land is unchanged). No change was announced to DIRT, which remains at 33%.

Personal Tax: Income tax, PRSI, and USC

Income tax

• The standard rate cut-off point (the point at which the 40% rate applies) increases by €2,500 from 1^st January 2027: from €44,000 to €46,500 for a single person, from €48,000 to €50,500 for a single person child carer, and from €53,000 to €55,500 for a married couple or civil partners with one income (with a maximum increase of €37,500 for a second earner).
• The Personal, Employee (PAYE) and Earned Income tax credits each increase by €125, from €2,000 to €2,125. The Home Carer Tax Credit increases by €100, from €1,950 to €2,050. The Government estimates a typical single middle-income earner will be around €750 a year better off, and a two-income couple up to €1,500.
• The Rent Tax Credit increases by €150 to €1,150 per person (by €300 to €2,300 for a jointly assessed couple) for the 2027 and 2028 tax years.

PRSI

• Separately from the Budget, on 1^st October 2026, PRSI Class A rates increased by 0.15% to 4.35% for employees, with a further legislated increase to 4.5% from 1^st October 2027 and a further increase due in 2028.
• The Class S self-employed rate is also 4.35%.
• The employer PRSI weekly earnings threshold increases from €552 to €600 per week for 2027, to help employers absorb the minimum wage increase. The Tánaiste estimated the saving at €650–€700 per employee per year.

Universal Social Charge (USC)

• USC rates from 1^st January 2027: 0.5% on the first €12,012, 2% from €12,013 to €30,300, 3% from €30,301 to €70,444 and 8% on the balance (plus a 3% surcharge on self-employed income over €100,000). Individuals with total income of €13,000 or less remain exempt.
• The ceiling of the 2% band increases by €1,600, from €28,700 to €30,300, ensuring that a full-time worker on the new minimum wage of €14.94 per hour remains outside the 3% rate. No USC rate reductions were announced.
• The USC concession for medical card holders (income of €60,000 or less) was extended to 31^st December 2027 in Budget 2026: reduced rates of 0.5% on the first €12,012 and 2% on the balance.

Inheritance tax and other measures

Capital Acquisitions Tax (CAT) 

• The Group A threshold increases from €400,000 to €420,000; Group B from €40,000 to €44,000; and Group C from €20,000 to €22,000, for gifts and inheritances taken on or after 7 October 2026.
• The CAT rate remains at 33%, and no other inheritance tax reforms were announced.
• Higher thresholds reduce, but do not remove, the potential CAT liability for many families. Section 72 / Section 73 life assurance policies remain an efficient way to fund inheritance tax.

Other measures introduced

• Housing: The maximum Help to Buy relief increases from €30,000 to €35,000 from 7^th October 2026 (other conditions, including the €500,000 property value limit, unchanged); Rent-a-Room relief increases from €14,000 to €16,000 from 1^st January 2027 and is extended to certain detached auxiliary dwellings. No renewal of the Mortgage Interest Tax Credit is included in the Budget tax measures.
• Childminding relief: The Childcare Services Relief exemption increases from €15,000 to €20,000, and the limit on the number of children minded is removed (subject to regulatory requirements).
• Bank levy: Extended in its current form for 2027, with a target yield of €200 million.
• Energy: reduced fuel excise rates are extended until 28^th February 2027 and will then be restored in phases, with full restoration by 30^th June 2027; carbon tax on home heating oil and gas is reduced and will not increase for the lifetime of the Government.
• Social welfare: Core weekly rates rise by €10; Child Benefit remains unchanged at €140 per month; Child Support Payment increases by €6 per week; and a new €500 cost-of-disability payment is introduced.

Finance (No. 2) Bill 2026 is expected to be published later in October and will contain the detailed legislation; we will issue further updates as details are confirmed.

Pensions update

State pensions

• The State Pension (Contributory) currently stands at €299.30 per week.
• Core weekly social welfare rates will increase by €10 from January 2027. The State Pension (Contributory) maximum personal rate will rise from €299.30 to €309.30 per week, and the State Pension (Non-Contributory) from €288 to €298 per week. The Fuel Allowance increases by €5 per week, the Living Alone Allowance by €3 to €25 per week, and a Christmas Bonus will be paid in 2026.
• State Pension age remains at 66, with the option to defer the State Pension (Contributory) up to age 70 for an increased payment.

Standard Fund Threshold (SFT)

As previously legislated, the SFT increases from €2.2 million to €2.4 million from 1^st January 2027, rising to €2.6 million in 2028 and €2.8 million in 2029, after which it will be indexed to wage inflation.

Budget 2027 confirms that Finance (No. 2) Bill 2026 will revise the age-related valuation factors used to calculate Defined Benefit (DB) pension benefits for Standard Fund Threshold (SFT) purposes from 1^st January 2027. The revised factors are expected to reduce the capital value attributed to many DB pensions when tested against the SFT, although the final factors will not be confirmed until publication of the Finance Bill. 

This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice.

The tax and legislative information contained herein is based on Zurich Life’s understanding of current practice and may change in the future.