Budget 2027 Provides Welcome Short-Term Relief For Households But Misses Opportunity To Back Enterprise
- Grant Thornton welcomes income tax measures and reduction in CGT but says greater ambition is needed to support indigenous enterprise
- High personal taxes and business costs continue to weigh on Ireland’s international competitiveness
6th October 2026: Budget 2027 will provide welcome relief for households and contains a number of positive measures for businesses, but falls short of the level of ambition required to strengthen Ireland's long-term competitiveness and build a more resilient indigenous enterprise base, according to Grant Thornton Ireland.
The firm welcomed measures to address immediate cost-of-living pressures, including changes to income tax bands and credits, childcare supports and energy measures designed to reduce costs for households.
Grant Thornton estimates that a single employee earning approximately €50,000 could see an annual tax saving of around €700 when the increased tax band and enhanced tax credits are combined, while a couple earning €100,000 could see an annual saving of approximately €1,500.
While welcoming the income tax measures, Grant Thornton said the absence of a longer-term roadmap to reduce Ireland's high marginal personal tax rates remains a significant concern.
The firm said that Budget 2027 should also be assessed against the longer-term challenges facing the Irish economy, including the State's reliance on corporation tax receipts from a relatively small number of companies and significant technological and geopolitical change. While Ireland's success in attracting FDI must remain a priority, the firm warned that more emphasis is needed to develop a culture of entrepreneurship and to help Irish companies to scale and compete internationally.
While welcoming the decision to reduce the headline Capital Gains Tax rate from 33% to 31%, the firm said the two-percentage-point reduction is unlikely to shift the dial in terms of creating more of an entrepreneurial culture in Ireland – and encouraging successful entrepreneurs to reinvest the proceeds from successful businesses has to become a greater economic priority.
Noting that there was no increase in the Revised Entrepreneur Relief, despite expectations that the lifetime limit would be raised, the firm pointed out that a meaningful increase in the threshold would have sent a stronger signal that Ireland is committed to supporting entrepreneurship and acknowledging that these businesses are a cornerstone of the Irish economy.
Grant Thornton also welcomed the extension of reductions in excise on petrol, auto diesel and marked gas oil into spring 2027, but the firm noted that many energy-intensive businesses will receive less direct support than households. The firm said energy costs should increasingly be viewed as an economic competitiveness issue as well as a cost-of-living and sustainability challenge, particularly for manufacturers competing with businesses elsewhere in Europe.
Commenting on Budget 2027, Peter Vale, tax partner at Grant Thornton Ireland, said:
“Budget 2027 gets a lot right in terms of addressing the immediate pressures facing households. At a time when people continue to find things tight, these interventions are understandable and should be welcomed. The bigger question though is whether the Government has been sufficiently ambitious about the longer-term challenges facing the Irish economy.
We’ve been really successful in attracting FDI over the years, but our reliance on a relatively small number of multinational companies for a significant proportion of corporation tax receipts should also be a reminder that we need to shift our domestic economy up a gear. That means creating a business culture where more Irish businesses can scale and ultimately make a greater contribution to the State's coffers. There were positive measures for businesses announced in the Budget, but collectively they don't represent the step change we need if we are serious about building the next generation of major Irish businesses.
The reduction in CGT is a step in the right direction and sends a positive signal, but at 31% Ireland's headline rate remains high. Similarly, it was disappointing that there was no roadmap outlining plans to address our high personal tax rates. The marginal rate for employees has increased from 43% in 2008 to over 52% today. This puts Ireland at a significant competitive disadvantage at a time when our corporation tax advantage continues to be eroded.
Budget 2027 contains plenty that should be welcomed, but when we stand back and look at it as a whole, there is still a bigger question about where indigenous enterprise fits within Ireland's long-term economic strategy.”
There were also a range of other notable announcements in Budget 2027 which Grant Thornton reacted to.
Personal Investment Account
Grant Thornton welcomed the introduction of the new Personal Investment Account (PIA), describing it as one of the most significant reforms to personal investment policy in Ireland in decades. With Irish households holding well in excess of €160 billion in bank deposits, the firm said the PIA has the potential to improve participation in capital markets and support greater long-term financial security.
Grant Thornton said simplicity will be critical to the success of the new regime, given the complexity of Ireland's existing investment taxation framework, including the interaction between exit tax, deemed disposal rules and different tax treatments across investment products. Ireland now has an opportunity to develop a simple and accessible framework capable of encouraging meaningful behavioural change.
Inheritance
Reacting to the changes announced to inheritances taxes, Grant Thornton said the increases in the Capital Acquisitions Tax thresholds provide some additional relief but do not address the more fundamental imbalance in Ireland's inheritance tax system. Revenue figures show that Group B and C beneficiaries generated almost €570 million in inheritance tax receipts in 2025, compared with €399 million from Group A beneficiaries, meaning almost 59% of inheritance tax collected came from beneficiaries outside the parent-child threshold category. Grant Thornton is calling on Government to consider a revised approach in Budget 2028, including consideration of a nominated beneficiary allowance that could provide greater recognition for an important relationship where the traditional parent-child model does not reflect an individual's circumstances.
Real Estate
Grant Thornton welcomed the range of measures aimed at supporting housing supply, encouraging productive use of existing property and supporting homeowners and renters. The introduction of the Derelict Property Tax, increase in the Rent Tax Credit, changes to Rent-a-Room relief, the increase in the maximum Help-to-Buy relief from €30,000 to €35,000 and amendments to the Residential Zoned Land Tax regime collectively demonstrate a continued focus on housing supply, home ownership and better utilisation of existing property stock.
Energy
From an energy transition perspective, Grant Thornton noted the absence of major new tax measures to accelerate the adoption of sustainable fuels. Government has indicated that it will continue to examine the role of lower-carbon fuels such as Hydrotreated Vegetable Oil (HVO) and Sustainable Aviation Fuel (SAF), and Grant Thornton said businesses will be watching closely for future policy developments in this area.