Budget 2027 Overview
October 2026
Budget 2027 was delivered against a backdrop of elevated inflation, higher energy costs, geopolitical uncertainty and a resilient Irish domestic economy. In response to continued wage inflation, the Government increased the higher-rate income tax bands, raised tax credits and reduced certain tax rates.
However, some of the most significant developments in the Budget related to investment. Changes to the taxation of investments were welcome, while the Government confirmed that the new Personal Investment Account (PIA) will launch in July 2027. The PIA is intended to provide a simpler, more tax-efficient way for people to invest.
Further details on the PIA are set out in this update. We will provide additional information as further details are announced.
Key Takeaways
- The Government is introducing a new Personal Investment Account (PIA) from 1 July 2027, designed to make investing simpler, more accessible and more tax efficient.
- No changes have been announced to pension contribution rules.
- Several tax changes have been announced, including reductions in the rates of tax on investment returns.
The Santiago View
We view the Budget as broadly positive from an investment perspective. The introduction of Personal Investment Accounts (PIAs) is a step in the right direction towards fostering a stronger investment culture in Ireland. The scheme is due to launch this summer, and we expect further details on how it will operate to emerge over the coming months.
The reductions in exit tax and capital gains tax rates, together with the narrowing of the gap between them, are also welcome developments. Combined with the introduction of PIAs, these changes suggest that Ireland is moving in the right direction.
Budget 2027 was delivered against a backdrop of elevated inflation, higher energy costs, geopolitical uncertainty and a resilient Irish domestic economy. In response to continued wage inflation, the Government increased the higher-rate income tax bands, raised tax credits and reduced certain tax rates.
However, some of the most significant developments in the Budget related to investment. Changes to the taxation of investments were welcome, while the Government confirmed that the new Personal Investment Account (PIA) will launch in July 2027. The PIA is intended to provide a simpler, more tax-efficient way for people to invest.
Further details on the PIA are set out in this update. We will provide additional information as further details are announced.
Budget 2027: Key Changes
Personal Investment Account
The Government is introducing a new Personal Investment Account (PIA) from 1 July 2027, designed to make investing simpler, more accessible and more tax-efficient.
The initiative forms part of the Roadmap for the Taxation of Retail Investment and aims to address Ireland’s historically low levels of direct retail investment and the significant amount of money held in cash deposits, currently estimated at approximately €175 billion.
Key Features:
- €50,000 tax-free threshold
- 1% tax charge on the account value above the threshold
- Annual contribution limit of €12,000
- Exemption from the existing deemed disposal regime
- Administration and tax reporting handled by the account provider
- Available to Irish tax residents aged 18 and over with a PPS number
- One account permitted per person
- A range of investment options available
Pensions
No changes have been announced to pension contribution rules.
As previously legislated for in the Finance Bill 2024, the Standard Fund Threshold will increase to €2.4 million in 2027
Taxation
Income Tax
The standard rate income tax band will increase by €2,500 to help offset the impact of inflation.
- Single person: increases from €44,000 to €46,500
- Married couples and civil partnerships with one earner: increases from €53,000 to €55,500
Income tax rates remain unchanged at 20% for the standard rate and 40% for the higher rate.
Universal Social Charge (USC)
The ceiling of the second USC rate band, charged at 2%, will increase by €1,600 to €30,300 from 1 January 2027.
Pay Related Social Insurance (PRSI)
Employee PRSI increased from 4.2% to 4.35% on 1 October 2026. Further increases are scheduled:
- 1 October 2027: increases to 4.50%
- 1 October 2028: increases to 4.70%
The employer PRSI threshold will increase from €552 to €600 per week in 2027.
Inheritance Tax
The Capital Acquisitions Tax (CAT) thresholds will increase from 7 October 2026.
- Group A: increases from €400,000 to €420,000
- Group B: increases from €40,000 to €44,000
- Group C: increases from €20,000 to €22,000
These increases will allow beneficiaries to receive larger gifts or inheritances before Capital Acquisitions Tax becomes payable.
Exit Tax and Capital Gains Tax
Two changes will reduce the tax burden on certain investment returns:
- Exit Tax: the rate on personally owned life assurance policies will fall from 38% to 35% from 1 January 2027.
Capital Gains Tax (CGT): the rate will fall from 33% to 31% from 7 October 2026
Conclusion
We view the Budget as broadly positive from an investment perspective. The introduction of Personal Investment Accounts (PIAs) is a step in the right direction towards fostering a stronger investment culture in Ireland. The scheme is due to launch in July, and we expect further details on how it will operate to emerge over the coming months.
The reductions in exit tax and capital gains tax rates, together with the narrowing of the gap between them, are also welcome developments. Combined with the introduction of PIAs, these changes suggest that Ireland is moving in the right direction.
Disclaimer
The information in this article is not a recommendation or investment research. It does not purport to be financial advice and does not take into account the investment objectives, knowledge and experience or financial situation of any particular person. This article has been produced and issued by Santiago Investments. It does not purport to be comprehensive. It is strictly for information and discussion purposes only
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