Budget 2027: what actually changes, and what most people will miss

Budget 2027 was announced on 6 October 2026. The headlines were about income tax, but for most people that is worth a few hundred euro a year, and part of it goes back in higher PRSI. The bigger changes for business owners, investors and families are further down the list, and two of them are already in force.

Here is what changed, who it affects, and when.

Income tax, USC and PRSI

The 20% income tax band widens by €2,500, to €46,500 for a single person and €55,500 for a married couple on one income. The personal, employee and earned income tax credits each rise by €125, to €2,125. The 2% USC band now runs to €30,300.

Against that, PRSI rose to 4.35% on 1 October 2026 and rises again to 4.5% on 1 October 2027. On the Department of Finance's own figures, a single employee on €50,000 is €691 a year better off, and a self-employed person on €100,000 gains €616. A married couple on one income of €65,000 with two children gains €894.

For employers

• Minimum wage: up from €14.15 to €14.94 an hour from 1 January 2027.
• Employer PRSI: the weekly threshold for the lower rate rises from €552 to €600. Both rates rise by 0.15% on 1 October 2027.
• Enhanced Reporting: from 2027 you can report tax-free payments to staff by the 14th of the following month, rather than on or before the day you pay them.
• VAT: no new cuts. The 9% rate for restaurants, catering and hairdressing, restored in July 2026, stays.

What does the minimum wage rise cost? For a full-time employee on 39 hours, weekly pay goes from €551.85 to €582.66. Compared with what you pay now, that is €1,602 a year in extra wages and about €158 in extra employer PRSI, so roughly €1,760 per person. For a part-timer on 20 hours it is about €903. As a rule of thumb, every 1,000 hours of minimum wage work costs about €860 more. That is before Sunday premiums, overtime and auto-enrolment contributions (1.5% of the extra pay, about €24 for a full-timer).

To put that in context: a café running 150 staff hours a week at minimum wage faces about €6,700 a year in extra cost.

The €600 PRSI threshold: what employers need to watch

From 1 January 2027, employer PRSI is charged at the lower rate (9.15%, then 9.30% from October) on employees earning €600 a week or less, up from €552. Above that, the higher rate (11.40%, then 11.55%) applies.

• It is a cliff, not a band. If weekly pay goes even 1c over €600, the whole week is charged at the higher rate. That is €13.50 more for that week, or about €700 a year if it happens every week.
• Where the cliff sits. At €14.94 an hour, €600 is about 40 hours. A full-timer who picks up overtime or a Sunday premium can cross it without anyone noticing.
• Some staff get cheaper. Employees earning between €552 and €600 a week were on the higher rate in 2026 and drop to the lower rate from January. That saves up to about €700 a year for each of them.
• Why the change matters. Without the new threshold, the minimum wage rise would have pushed every full-time minimum wage worker over the old €552 limit, adding about €680 a year each in employer PRSI. The new threshold avoids that cost. It is not a saving on what you pay today.

A checklist for employers before January

• Update payroll. Check your software has the €14.94 minimum wage, the €600 PRSI threshold, the new USC band and the higher tax credits before the first pay run of 2027.
• Check the €600 line. List staff whose regular weekly pay is close to €600 and look at how rotas, overtime and premiums interact with it.
• Budget the cost. Allow about €1,760 per full-time and €900 per 20-hour minimum wage employee, plus the PRSI increase from October 2027.
• Use the Enhanced Reporting option. From 2027 you can report travel and small benefit payments monthly instead of before each payment.
• Review prices. Work out your extra cost per 1,000 hours and decide whether prices, rotas or both need to change.

For companies and the self-employed

Preliminary corporation tax gets simpler. The threshold for a "small company" rises from €200,000 to €350,000 of prior-year tax, and larger companies can pay 80% by the final instalment and top up within four months of the year end. Start-up relief is extended to the end of 2030.

Professional services withholding tax is moving from a flat 20% to personalised rates. This affects GPs, dentists and other professionals paid by the HSE or insurers. It takes effect by commencement order, so no start date has been set yet.

Savings, investments and inheritance

• Capital Gains Tax falls from 33% to 31% for disposals from 7 October 2026 (development land stays at 33%).
• Exit tax on funds, ETFs and life policies falls from 38% to 35%.
• Inheritance and gift tax thresholds rise from 7 October 2026: €420,000 for children, €44,000 for Group B, €22,000 for Group C.
• New Investment Account from 1 July 2027: pay in up to €12,000 a year, no tax on the first €50,000 of value, then 1% a year on the excess. No exit tax, CGT or deemed disposal, and the provider handles the tax.

Housing and family

The Rent Tax Credit rises to €1,150 for a single person and €2,300 for a couple, for 2027 and 2028. Help to Buy rises to €35,000 with immediate effect. Rent-a-Room relief goes to €16,000, and childminders will be able to earn €20,000 tax-free with no cap on the number of children.

What most people will miss

• Two changes are already live. The CGT cut and higher inheritance thresholds started on 7 October 2026, so the timing of a sale or gift matters now.
• A new Derelict Property Tax. From 2027, vacant and unusable buildings in towns of 4,000+ people face a 7% annual tax on their value. Local registers are published in September 2027 and the first payment is due in June 2028.
• Cheaper home heating. Carbon tax on kerosene and gas is cut to €48.50 a tonne until 2030.
• Solar panels. The tax-free amount for electricity sold back to the grid rises from €400 to €600.
• E-invoicing. Not a Budget change, but on the timetable: every business must be able to receive e-invoices from 1 November 2028.

Related reading

• Payroll services
• Pension auto-enrolment: what employers must do
• E-invoicing readiness check (2 minutes)
• Free cash flow forecast tool

What to do next

If you are planning to sell an asset, pass on property or money, take on staff or invest long-term savings, talk to us before you act. Ring 041 685 3162, email info@mawhately.ie or book a call online.

Based on the Budget 2027 announcements of 6 October 2026. All measures are subject to Finance (No. 2) Bill 2026. General information only, not advice for your circumstances.