On the 6thOctober 2026 Ireland announced its Budget 2027 which includes several important measures for Irish businesses, ranging from enhanced supports for research and innovation to changes in capital gains tax, preliminary corporation tax and employer PRSI. The measures below are a high-level summary. Further detail will be available when Finance (No. 2) Bill 2026 is published.
Business Tax Measures
Capital Gains Tax Rate Reduced
The standard rate of Capital Gains Tax will reduce from 33% to 31%. This should benefit companies, business owners and investors disposing of shares, business assets and other chargeable assets. However, the 33% rate applicable to disposals of development land under section 649A TCA 1997 will remain unchanged.
R&D Tax Credit Enhancements
A number of improvements to the Research and Development Tax Credit regime have been announced:
- The limits for subcontracting to third-level institutions and third parties will increase from 15% to 20%, and from €100,000 to €200,000, respectively.
- The first-year payment threshold will increase from €87,500 to €105,000.
- The treatment of qualifying R&D wage costs will be enhanced.
- Regulatory approval of a clinical trial may be used to satisfy the science test for qualifying R&D activities.
- A simplification measure will allow the R&D Tax Credit to be taken into account when calculating preliminary corporation tax.
Preliminary Corporation Tax
The preliminary corporation tax rules are to be amended to provide businesses with greater flexibility and reduce the associated administrative burden.
The small company threshold will increase from €200,000 to €350,000. In addition, the preliminary tax requirement will be satisfied where a company pays 80% of its current-year liability by the final preliminary tax instalment date and pays the balance within four months of the end of the accounting period. The existing 45% deeming provision relating to underpayments will also be removed.
Knowledge Development Box
The Knowledge Development Box regime will be extended for a further five years. The regime provides an effective corporation tax rate of 10% on qualifying profits generated from qualifying intellectual property. Companies will also be permitted to opt out of the regime.
Employment Taxes
The employer PRSI threshold will increase from €552 to €600 per week in 2027. This measure is intended to support SMEs and ease the PRSI impact arising from the increase in the National Minimum Wage.
The standard income tax rate band will increase by €2,500 to €46,500, while the Personal, Employee and Earned Income Tax Credits will each increase by €125. The entry threshold for the 3% USC band will increase from €28,700 to €30,300.
Investment in SMEs and Start-Ups
The Government intends to extend the Employment Investment Incentive, Start-Up Capital Incentive, Start-Up Relief for Entrepreneurs and Angel Investor Relief, subject to the adoption of the new EU General Block Exemption Regulation planned for the end of 2026.
Large Multinational Groups
Legislation implementing the OECD Pillar Two “Side-by-Side” package is expected to be included in the Finance Bill. These rules will be relevant to multinational groups with annual consolidated revenues of €750 million or more.
Interest Relief Review
Plans to simplify interest relief rules for certain lending and investment activities was announced. Further details are awaited.
Personal Tax Measures
Capital Acquisitions Tax (CAT)
All three CAT thresholds have been increased. The increase applies to gifts and inheritance received on or after 7th October 2026. CAT rate remains unchanged at 33%.
| Group |
|
Increased Threshold 7th Oct |
| Group A (parent to child) |
€400,000 |
€420,000 |
| Group B |
€40,000 |
€44,000 |
| Group C |
€20,000 |
€22,000 |
Income Tax and USC
The Budget includes a number of measures aimed at reducing the personal tax burden:
- Standard rate band increased by €2,500 to €46,500.
- Personal Tax Credit increased by €125.
- Employee Tax Credit increased by €125.
- Earned Income Credit increased by €125.
- Home Carer Tax Credit increased by €100.
- USC 3% threshold increased from €28,700 to €30,301.
New Irish Investment Account
A new Irish Investment Account will be introduced from 1 July 2027.
Key features include:
- Tax-free threshold of €50,000.
- 1% annual charge on values above €50,000.
- Maximum annual contribution of €12,000.
- Investments can include shares, bonds, ETFs and investment funds.
- No CGT, Dividend Withholding Tax, Investment Undertaking Tax or Life Assurance Exit Tax.
- Deemed disposal rules will not apply.
Investment Funds
The tax rate applying to Irish and equivalent offshore investment funds and life assurance products will reduce from 38% to 35%
Pensions
The Standard Fund Threshold valuation factors used for certain pension benefits will be revised from 1 January 2027. The detailed changes have not yet been published.
Property Taxes
The exemption allowing landowners to seek removal from the Residential Zoned Land Tax regime is being extended into 2027 where rezoning applications reflect genuine economic activity.
The new Derelict Property Tax, announced previously, will be legislated for in the upcoming Finance Bill. The tax will apply at a rate of 7%, with local authorities beginning the identification and registration process during 2027.
