Personal income tax bands and credits
The standard rate band cut-off point is being increased by €2,500 for all earners, giving a tax saving of €500 to all higher-rate taxpayers.
Income tax credits are also being increased as follows:
Personal Tax Credit from €2,000 to €2,125
Employee Tax Credit from €2,000 to €2,125
Earned Income Tax Credit from €2,000 to €2,125
Home Carer Tax Credit from €1,950 to €2,050
Most employed or self-employed taxpayers will therefore save an additional €750 of income tax.
Universal Social Charge (USC)
The 2% USC rate band ceiling will increase from €28,700 to €30,300. The 3% rate of USC remains unchanged, alongside the exemption for income less than €13,000.
This will ensure that a full-time worker on the minimum wage who benefits from the increase in the hourly minimum wage rate from €14.15 to €14.94 will remain outside of the highest rates of USC.
Funds and life assurance products
The tax rate applied to Irish and equivalent offshore funds will be reduced from 38% to 35%. The rate change will also apply to Exchange Traded Funds (ETFs) that are subject to tax under this regime, including Irish domiciled ETFs.
Investment Account
A new Investment Account is being introduced and will be available from 1 July 2027. The account is designed to simplify retail investment by creating a new framework for investing in capital markets. Investments made through the account will be subject to a flat rate tax of 1% on the value of the account above a tax-free threshold of €50,000. An annual contribution limit of €12,000 will also apply.
Capital Acquisitions Tax Thresholds
The standard rate of CAT is 33% in respect of gifts and inheritances taken on or after 6 December 2012. Currently, there are three tax-free thresholds depending on the relationship between the disponer and the beneficiary, with CAT applying on the amount over the thresholds. An increase to the thresholds for gifts or inheritances will apply as follows:
CAT Category A Threshold from €400,000 to €420,000
CAT Category B Threshold from €40,000 to €44,000 and
CAT Category C Threshold from €20,000 to €22,000.
The increased Group thresholds will apply to gifts and inheritances taken on or after 7 October 2026.
Help to Buy Scheme
The maximum available relief from the Help to Buy Scheme will increase by €5,000 to €35,000.
Rent tax credit
The rent tax credit increases by €150 per person. This will result in a credit of €1,150 per year for single applicants or €2,300 for jointly assessed.
Rent-a-Room
The Rent a Room scheme threshold is increased by €2,000 so that a homeowner can earn from €16,000 tax-free by renting out rooms in their home.
The relief is also extended to include newly installed Detached Auxiliary Dwellings between 32 and 45 square meters. The change applies retrospectively from 27 July last when the new planning rules came into force.
Microgeneration of Electricity
The exemption from Income Tax, USC and PRSI for the microgeneration of electricity is being increased from €400 to €600 for certain profits arising to a qualifying individual who generates energy from renewable, sustainable or alternative energy sources for their own consumption. The exempted profits are those arising from the domestic generation of electricity which is supplied to the grid.
Third Level Fees
The tax relief for Third Level Fees is being aligned with the level of the Student Contribution Fee by reducing the amount disregarded (or ineligible for tax relief). As such, a person may claim 20% tax relief on the Student Contribution Fee paid in respect of a second and subsequent student for cumulative fees in excess of the disregarded amount.
Childcare Services Income Tax Relief
The ceiling for Childcare Services Relief Income Tax exemption is being increased from €15,000 to €20,000 for qualifying childminders caring for children in the childminder’s home. In addition, the limit on the number of children who may be cared for while a qualifying childminder claims the relief is being removed, subject to compliance with prevailing regulatory requirements.
Nurturing Skills Learner Fund
The Nurturing Skills Learner Fund provides rebates of relevant third level course fees to those who remain in childcare employment for a continuous six months after they complete the relevant third level course. Rebates paid to qualifying students under the Nurturing Skills Learner Fund are being made tax exempt.