If you felt a little short-changed by last year's Budget, you weren't imagining it. There was no change to income tax bands or credits, so as wages crept up, more of every pay rise went to Revenue.
This year is different. The Minister for Finance has announced a €1.3 billion income tax package, and almost everyone who pays income tax will see a bit more in their pay packet from January.
It won't change your life, but it all adds up. We've gone through the detail here at Gilheany & co , so here's what's changing and what it's likely to mean for you.
What's changing
There are three main changes, and most people will benefit from at least two of them.
- More of your income taxed at 20%. The point where you start paying the higher 40% rate rises by €2,500, from €44,000 to €46,500 for a single person. Married couples and civil partners get a matching increase on their bands.
- Bigger tax credits. The personal tax credit goes up by €125, and so do the employee tax credit for PAYE workers and the earned income credit for the self-employed. For most people, that's €250 less tax a year before anything else.
- Less USC for lower and middle earners. The 2% USC band is being stretched, so the 3% rate now starts at €30,300 instead of €28,700. That keeps pace with the minimum wage increase.
There's a little extra for some households too. The Home Carer tax credit goes up by €100, and the tax relief on third-level fees is being brought into line with the student contribution, which should mean a bit more back for parents paying college fees.
What it means in euro
Here's roughly how much less income tax and USC a single PAYE worker will pay in 2027, along with the Government's own figure for a working couple.
|
You earn |
Saving a year |
Roughly a month |
|---|---|---|
|
€25,000 |
€250 |
€21 |
|
€35,000 |
€266 |
€22 |
|
€50,000 |
€766 |
€64 |
|
€80,000 |
€766 |
€64 |
|
Couple on €100,000 between two incomes |
about €1,500 |
about €125 |
You'll notice the saving levels off. Once you earn €46,500 or more, a single person gets the full benefit of the wider band, so someone on €80,000 saves the same as someone on €50,000.
These figures cover income tax and USC only, not PRSI, and your own numbers will depend on your circumstances and the credits you claim.
Good to know
- Self-employed? You benefit too. Your personal credit and earned income credit both go up by €125, and the wider band and USC changes apply to you in the same way.
- When does it start? The changes kick in from January 2027, so you'll see the difference in your first pay packet of the new year.
- Do you need to do anything? If you're a PAYE worker, Revenue updates your credits and bands automatically, so there's nothing to fill in. It's still worth glancing at your January payslip to make sure everything looks right.
- Claiming everything you're entitled to? Credits like the Home Carer credit and the rent tax credit have to be claimed, and every year people miss out on money that's theirs.
Want to know your own numbers?
Everyone's situation is a little different, and the figures above are a guide rather than a promise. If you'd like to know exactly what Budget 2027 means for you, or whether you're claiming every credit you could be, just get in touch with the team at Gilheany & co . We're always happy to help.
