Budget 2027: Grant Thornton welcomes Summer Economic Statement focus on making work pay and supporting enterprise
DUBLIN, 22 July, 2026 – Grant Thornton Ireland has welcomed the direction set out in the Government’s Summer Economic Statement, particularly its commitment to ensuring that economic progress is reflected in workers’ take-home pay while continuing to invest in competitiveness, infrastructure and productivity.
While the Statement contains limited detail on specific tax measures, it provides a clear indication of the Government’s priorities for Budget 2027. The proposed €1.5 billion tax package, within an overall Budget package of €8.5 billion, provides an opportunity to support workers, address cost-of-living pressures and strengthen Ireland’s attractiveness as a place to live, work and invest.
The Statement rightly recognises that Ireland is operating in a more uncertain global environment, with geopolitical disruption, energy market volatility, trade tensions and rapid technological change reshaping the economic landscape. Against that backdrop, tax policy should be used to strengthen resilience, support labour supply and ensure Ireland remains competitive for workers, entrepreneurs and businesses.
Making work pay should be the organising principle for Budget 2027
The strongest tax signal in the Summer Economic Statement is the emphasis on rewarding work and effort. The Statement identifies this as the first pillar of Budget 2027 and states that Government wants to help working people retain more of their earnings.
This direction is welcome. However, the Budget will need to move beyond principle and deliver visible, practical measures. As wage levels rise, workers should not be pulled further into higher effective tax rates because of inflation, pay progression or labour market pressures. Budget 2027 should therefore include a meaningful personal tax package that protects take-home pay and improves Ireland’s competitiveness for mobile talent.
Tax measures that would support this direction
The Government should consider a combination of measures across income tax, USC and PRSI. These should include an increase in the point at which workers enter the higher rate of income tax, increases to personal tax credits, targeted USC reductions and a clear approach to preventing fiscal drag over future Budgets.
The tax system should also support labour force participation. Measures that reduce the cost of returning to work, support second earners and complement childcare affordability measures would be consistent with the Statement’s recognition that living standards depend not only on income, but also on access to affordable services.
Talent, mobility and employee participation
Making work pay is also a competitiveness issue. Ireland’s personal tax regime is a key factor in attracting and retaining skilled workers, particularly in sectors where talent is internationally mobile. Budget 2027 should therefore review reliefs and incentives that support talent mobility, employee participation and long-term retention.
Further reform of employee share schemes, internationally focused reliefs and savings and investment incentives would help workers participate more fully in the growth of the businesses in which they work. It would also support entrepreneurship, employee engagement and household financial resilience.
Supporting enterprise, entrepreneurship and investment
The Statement refers to rewarding endeavour, whether through work or entrepreneurial activity. That message should be reflected in Budget 2027 through measures that support founders, owner-managed businesses and family-owned enterprises.
While the Statement focuses heavily on rewarding labour, there is limited detail on measures targeted at indigenous businesses, entrepreneurs and family-owned groups. Budget 2027 should therefore also consider how best to reward entrepreneurship and unlock private capital for reinvestment.
Grant Thornton Ireland continues to advocate for a more competitive Capital Gains Tax regime, enhancements to entrepreneur-focused reliefs and targeted measures that support business succession and employee ownership. Targeted reforms to capital taxes and succession reliefs could encourage business owners to reinvest capital into growth, innovation and M&A activity, helping to scale the next generation of indigenous Irish businesses.
Housing, infrastructure and the cost of living
The Summer Economic Statement again recognises that housing and infrastructure constraints are weighing on living standards and competitiveness. Tax policy cannot solve supply issues on its own, but it can support viability and improve delivery where carefully targeted.
Budget 2027 should consider tax measures that support the delivery of new homes, improve project viability and complement broader Government infrastructure commitments. In particular, the VAT burden associated with new residential development should remain under review, alongside targeted measures to encourage supply.
Productivity, innovation and the AI transition
The Statement places clear emphasis on productivity, digitalisation and the adoption of AI. Tax policy should support that agenda by encouraging investment in innovation, digital capability, skills and high-value employment.
Budget 2027 should therefore further strengthen Ireland’s innovation offering, including through enhancements to the R&D tax credit regime and consideration of mechanisms that reward incremental innovation and digital investment. Such measures would support a more productive economy and help businesses adapt to technological change.
Maintaining a competitive and efficient tax system
The Statement also underlines the need for fiscal sustainability, particularly given the concentration of corporation tax receipts. That makes it even more important that Ireland maintains a tax system that supports sustainable growth rather than relying on a narrow revenue base.
Budget 2027 should continue the process of simplifying and modernising the tax code. Measures such as broadening participation exemption provisions, introducing a foreign branch exemption, simplifying legacy rules and reducing administrative complexity would support Ireland’s position as a leading location for international business and investment.
Sectors under cost pressure
Many domestically focused businesses continue to face significant cost pressures from labour, energy and financing costs. A Budget focused on making work pay should also recognise the pressure on employers that are creating and sustaining employment across the economy.
Targeted measures to support business sustainability should be considered, including a review of VAT rates applicable to particularly exposed sectors such as hospitality, where cost pressures remain acute and the sector continues to play an important role in employment, tourism and regional economies.
Encouraging saving, investment and long-term resilience
The Statement’s emphasis on building fiscal reserves through the Future Ireland Fund and the Infrastructure, Climate and Nature Fund is a reminder that long-term resilience matters for households as well as for the State.
Budget 2027 should include measures that encourage individuals to save and invest, including reform of the taxation regime applicable to Irish investment products and a review of the deemed disposal rules. A more accessible and modern investment tax regime would support household financial resilience and deepen participation in domestic capital markets.
Comment
Peter Vale, Head of Tax at Grant Thornton Ireland, said:
“The Summer Economic Statement is light on specific tax detail, but the direction is welcome. The clearest message is that Budget 2027 should be about making work pay. That is the right priority at a time when employees, families and employers are all dealing with higher living costs, wage pressures and intense competition for talent.
The €1.5 billion tax package should be used in a focused way. It should help workers retain more of their earnings, prevent inflation and pay increases from pushing people into higher effective tax rates, and support labour force participation. That means looking at income tax bands, credits, USC and the wider interaction between tax policy, childcare affordability and the cost of working.
Making work pay should also be understood as a competitiveness agenda. Ireland needs a personal tax regime that supports talent attraction and retention, an enterprise tax regime that rewards entrepreneurship and succession, and an innovation framework that encourages investment in productivity, digitalisation and AI. A Budget that supports workers while also backing the businesses that create employment would be a positive and balanced response to the challenges identified in the Statement.
There is limited detail at this stage, and the choices will be made in the Budget process. However, the overall direction is encouraging. If Budget 2027 converts that direction into targeted, practical tax measures, it can support households, strengthen competitiveness and help ensure that economic progress is felt by workers, families and businesses across Ireland.”
Marie Melody, Corporate Tax Partner at Grant Thornton Ireland, added:
“We welcome the Statement’s commitment to a €1.5 billion tax package, alongside continued investment in infrastructure and AI-driven productivity. The overall approach is positive for business and aligns with many of the measures Grant Thornton has advocated to strengthen competitiveness, support infrastructure delivery and maintain Ireland’s attractiveness as a place to invest and do business.
However, the Statement provides limited detail on measures aimed at indigenous businesses, entrepreneurs and family-owned enterprises. While there is a strong focus on rewarding labour, Budget 2027 should also consider how best to reward entrepreneurship and encourage private capital to be reinvested in growth, innovation and business expansion.
Targeted reforms to capital taxes, succession reliefs and investment incentives could help business owners reinvest in scaling their operations, pursuing acquisitions and supporting innovation. As the Budget is developed, we encourage the Government to use the opportunity to support Irish entrepreneurship at a time when competitiveness, productivity and indigenous business growth are central to Ireland’s long-term economic success.”
ENDS
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