Tuesday Is Budget Day
On Tuesday 6 October 2026, Tánaiste and Minister for Finance Simon Harris will deliver Budget 2027 — the first budget of his tenure as Finance Minister. Minister for Public Expenditure Jack Chambers will set out the spending side of a package confirmed at €8.5 billion: €7 billion in additional public spending and €1.5 billion in tax measures. The date has been known since April, while the package was fixed in July's Summer Economic Statement. The unanswered question is how the tax allocation will be divided among businesses, workers, founders, investors and homeowners. That matters because the measures announced will shape payroll decisions, household budgets and investment plans well beyond budget week.
The government calls this the tightest budget since before COVID-19. Although €7 billion sounds substantial, much will meet existing pressures from healthcare, social protection, population growth, contingency planning and a new public sector pay agreement. The €1.5 billion tax envelope allows targeted changes, not sweeping reform. Harris's choices will therefore determine who gains most and whether the package provides visible relief without creating permanent commitments that weaken the public finances. A narrowly targeted package may lack the spectacle of recent budgets, but it can still change the monthly position of households and the confidence of employers.
Income Tax: The Change Most Workers Are Waiting For
The most anticipated measure is a rise in the income tax standard rate band — the point where earnings move from 20% to 40%. It currently stands at €44,000 for a single person. Harris has promised a personal tax package and argued that the threshold, which was €33,000 in 2015, has not kept pace with wage growth and inflation.
With €1.5 billion covering every tax measure, analysts including Icon Accounting consider an increase of €2,000 to €3,000 realistic, moving the threshold to €46,000 or €47,000. For workers earning above the current band, that could add roughly €400 to €600 to annual take-home pay before the coming PRSI increase. Further USC adjustments are also expected, while tax practitioners have called for increases to the Personal Tax Credit and Employee Tax Credit.
The PRSI Offset: What Workers Should Know
Any income tax gain will be partly offset by a PRSI increase already written into law. Employee PRSI rises from 4.2% to 4.35% in October 2026, then to 4.5% in October 2027 and 4.7% in October 2028. A worker on €50,000 may benefit from a wider standard rate band while paying more PRSI at the same time. The top marginal rate for PAYE workers consequently rises from 52.2% to 52.35%; for self-employed workers it moves from 55.2% to 55.35%. The net gain, rather than the headline tax cut, is what matters. Workers comparing Tuesday's announcement with their payslips will need to calculate both changes together, especially as the later PRSI increases are already scheduled.
The New Personal Investment Account: A Major Structural Change
A major structural announcement expected on Tuesday is the new Personal Investment Account, a state-backed, tax-incentivised vehicle outlined in the Department of Finance's August roadmap for retail investment taxation. Available to Irish tax residents aged 18 and over, and modelled on products in Sweden and the United Kingdom, it aims to encourage households to move some savings from deposit accounts into long-term investments.
The annual contribution limit, tax-free threshold and tax rate above that threshold are due to be revealed in the budget. Davy's September analysis also noted that the eight-year deemed disposal rule applied to investment funds is under review. For workers and business owners holding substantial cash savings, this account could prove more important over time than a once-off tax adjustment — but its value will depend on the limits, eligible investments, charges and tax treatment Harris announces.
Inheritance Tax: Growing Pressure, Uncertain Outcome
Capital Acquisitions Tax has drawn strong pre-budget attention. The Group A threshold for gifts or inheritances from parent to child is €400,000, while Group B for other close relatives is €40,000. That gap creates sharply different outcomes: inheriting €500,000 from a parent produces a CAT bill of about €33,000, while the same inheritance from an aunt or uncle creates a bill of €151,800 after the threshold at the current 33% rate.
Major reform nevertheless appears unlikely. The government has not signalled a substantial change and the tax envelope is constrained. Advisers have sought higher thresholds and a lower headline CAT and CGT rate, but a cut from 33% to 20% would consume considerable resources. The numbers to watch are therefore the Group A and Group B thresholds, rather than expectations of a wholesale redesign. Even modest threshold increases would matter where house-price growth has pulled otherwise ordinary family estates further into the tax net.
Energy and Cost of Living: What Has Already Been Announced
Several measures were confirmed before budget day. On 29 September, the government announced a €600 home battery grant and extended the solar panel grant to homes built before 2025, both from October 2026. Further supports may include help for replacing old boilers. These announcements place household energy investment inside the wider cost-of-living package, while also directing public support toward lower consumption over time.
The postponed carbon tax increase, now due on 14 October, is also expected to feature — either on its revised timetable or with another adjustment. Businesses should watch both direct energy supports and the effect of fuel costs on transport, suppliers and household spending. The final package will show whether the government prioritises once-off relief, permanent efficiency measures or a combination of both.
Childcare: A Phased Commitment
The government has restated its commitment to cap childcare costs at €200 per month per child, but has not confirmed the step Budget 2027 will take toward that target. The pledge is phased across the government's term, and a second tier of Child Benefit is now considered more likely in Budget 2028. Parents can expect a further reduction in childcare costs; Tuesday's crucial detail is its size, start date and whether providers receive enough support to deliver it.
For Businesses: What the SME and Entrepreneurship Agenda Looks Like
For founders, the central issue is CGT Revised Entrepreneur Relief. It taxes qualifying gains from business disposals at 10% rather than 33%, with a lifetime limit raised from €1 million to €1.5 million in Budget 2026. Business groups want another increase and CGT rollover relief, allowing proceeds from a qualifying sale to be reinvested in a new venture without an immediate tax charge. Either change would influence succession, exits and reinvestment decisions.
VAT and Relevant Contracts Tax measures affecting construction and hospitality may also feature, alongside possible administrative changes to the R&D Tax Credit. The credit rose from 30% to 35% for SMEs in Budget 2026, but practitioners continue to seek simpler reporting requirements for smaller employers. The practical test is whether Tuesday's measures reduce the cost and complexity of investing, hiring and scaling — not simply whether another incentive is announced. For smaller firms, certainty and ease of use can be as valuable as a higher headline rate that requires costly advice to claim.
The public sector strike called for 14 October, eight days after the budget, adds pressure to its reception. The projected 2026 Exchequer surplus is €9.2 billion, yet ministers argue that structural costs are absorbing the available spending room. That tension — strong headline finances alongside tight permanent capacity — will shape both negotiations with unions and the wider political judgment on whether the government has done enough.
The Bottom Line
Budget 2027 is an €8.5 billion package, with €7 billion in spending and €1.5 billion in tax measures. The standard rate band is the most closely watched personal tax change; the Personal Investment Account is the most important structural proposal; and higher PRSI will offset part of workers' gains. For businesses, the decisive figures concern entrepreneur relief, VAT, RCT and R&D support. When Harris begins at 1pm on Tuesday, the real measure will be how much lasting value the government creates from a deliberately limited tax envelope.