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Budget 2027 was announced on Tuesday 6 October 2026. For businesses, the headlines are no change to the 12.5% corporation tax rate or the VAT registration thresholds, a cut in Capital Gains Tax from 33% to 31%, a more flexible preliminary corporation tax regime, an enhanced R&D tax credit, an extended start-up relief, and a minimum wage of €14.94 an hour from 1 January 2027. This page sets out the confirmed measures that matter for Irish businesses, taken from the Department of Finance’s Budget 2027 documents.

Key facts

  • Spending: total spending rises by €7.1 billion (6%), with capital spending of €20.3 billion, up €1.1 billion.
  • Corporation tax: no change to the 12.5% trading rate. Preliminary tax rules eased and the small company threshold raised from €200,000 to €350,000.
  • Capital Gains Tax: standard rate cut from 33% to 31% for disposals on or after 7 October 2026.
  • Start-up relief: Section 486C relief extended to 31 December 2030.
  • R&D tax credit: first year payment threshold up from €87,500 to €105,000, and subcontracting limits raised.
  • Minimum wage: up from €14.15 to €14.94 an hour from 1 January 2027.
  • Income tax: standard rate band up €2,500, main tax credits up €125.
  • VAT: no change to the registration thresholds or the general VAT rates.

Corporation tax and enterprise supports

The 12.5% rate of corporation tax on trading income is unchanged. The main corporation tax changes are administrative and are aimed at reducing uncertainty for companies.

Preliminary corporation tax made more flexible

  • Preliminary tax requirements will be met where at least 80% of the current year’s liability is paid by the final instalment date, and a top up to 100% is paid within four months of the end of the accounting period.
  • A 45% deeming provision is being removed, so an underpayment of the second instalment no longer automatically counts as an underpayment of the first.
  • The small company threshold, based on the previous year’s corporation tax liability, rises from €200,000 to €350,000. More companies will therefore qualify for the less onerous small company preliminary tax rules.

R&D tax credit enhanced

The R&D tax credit, currently 35% of qualifying spending, has been enhanced:

  • The first year payment threshold rises from €87,500 to €105,000, so the first €105,000 of a claim is paid in full in year one instead of over three annual instalments.
  • Limits on R&D subcontracted to universities and to unconnected third parties rise to 20% and €200,000.
  • The credit will be better recognised for preliminary corporation tax purposes, giving a cash flow benefit.
  • Companies can increase their qualifying cost base by 5% of qualifying R&D wage costs.

Start-ups and investors

  • Section 486C start-up relief, which relieves new companies from corporation tax on trading income in their first five years, is extended by four years to 31 December 2030. It applies in full where the company’s corporation tax liability is under €40,000, with marginal relief up to €60,000.
  • The Government intends to extend the Employment Investment Incentive (EII), the Start-Up Capital Incentive and Start-Up Relief for Entrepreneurs (SURE) in their current form, subject to the new EU General Block Exemption Regulation due to take effect on 1 January 2027.
  • Capital Gains Tax relief for investment in innovative enterprises (Angel Investor Relief) is extended.
  • The Knowledge Development Box is extended to 1 January 2032.
  • Ireland’s Pillar Two minimum tax rules are being amended to reflect the OECD side by side agreement, including new safe harbours. This mainly affects large multinational groups.

Capital Gains Tax

The standard rate of CGT falls from 33% to 31% for disposals made on or after 7 October 2026. The 33% rate on disposals of development land does not change.

VAT

Budget 2027 makes no change to the VAT registration thresholds, which remain €42,500 for services and €85,000 for goods, and no change to the general VAT rates. Our guide to the VAT registration threshold in Ireland remains up to date. The VAT changes are targeted at agriculture:

  • The VAT rate on non oral respiratory vaccines for livestock is reduced to 9%.
  • The farmer’s flat rate addition is raised to 4.8%.
  • The fund for the VAT Compensation Scheme for charities rises to €15 million a year.

Income tax, USC and PRSI

These changes apply from 1 January 2027 and affect employees’ take home pay and the tax bills of sole traders.

  • Standard rate band: up €2,500. For a single person it rises from €44,000 to €46,500, and for a married couple with one income from €53,000 to €55,500.
  • Tax credits: the Personal, Employee and Earned Income tax credits each rise by €125, from €2,000 to €2,125. The Home Carer credit rises from €1,950 to €2,050.
  • USC: the ceiling of the 2% band rises by €1,600, from €28,700 to €30,300. From 1 January 2027 the rates are 0.5% up to €12,012, 2% from €12,013 to €30,300, 3% from €30,301 to €70,444 and 8% above that, with a 3% surcharge on self-employed income over €100,000. Incomes under €13,000 remain exempt.
  • PRSI: the previously agreed increases continue. The employee rate rose from 4.2% to 4.35% on 1 October 2026 and will rise to 4.5% on 1 October 2027.

Employer costs and payroll

  • Minimum wage: the national minimum wage rises from €14.15 to €14.94 an hour from 1 January 2027. The USC change is designed so that a full time adult worker on the new minimum wage stays outside the top USC rates.
  • Payroll reporting: from 1 January 2027, employers can choose to report certain tax free payments under the Enhanced Reporting Requirements either on or before the payment date, or by the 14th of the following month. This follows recommendations from the Cost of Doing Business Advisory Forum. Our guide on registering as an employer explains how payroll reporting works.
  • Professional Services Withholding Tax: the flat 20% rate is to be replaced with personalised deduction rates, and self-employed taxpayers will be able to opt in to real time information exchange with Revenue, subject to a Commencement Order.

Energy, carbon and excise

  • Auto fuels: the carbon tax increase on auto fuels due on 14 October 2026 is deferred to 1 May 2027, with a further increase on 13 October 2027.
  • Kerosene and natural gas: carbon tax is reduced to €48.50 per tonne of CO2 until 2030.
  • Marked gas oil: scheduled carbon tax increases are deferred to 1 May 2027 and 13 October 2027.
  • Petrol and diesel excise: the temporary reduction in the non carbon component of Mineral Oil Tax will be restored in stages, starting on 28 February 2027, with further increases on 8 April 2027 and 1 May 2027 and full restoration on 30 June 2027.
  • Vehicles: Category A Vehicle Registration Tax rates rise by 1% for bands 3 to 20, and VRT relief on electric vehicles is extended to 31 December 2028.
  • Tobacco and vaping: excise on a pack of 20 cigarettes rises by €1, and e-liquid excise rises by 20 cents per millilitre from 1 January 2027.
  • Betting: a new 25% charge on commissions from pool betting starts generally on 1 January 2027.
  • Banks: the bank levy is extended to 2027, targeting €200 million.

Spending that affects businesses

  • Spending rises by €7.1 billion, or 6%, on the 2026 ceiling. Capital spending reaches €20.3 billion in 2027, up €1.1 billion (5.9%), in line with the National Development Plan, and current spending reaches €105.3 billion.
  • An additional €6 billion from 2027 to 2030 to deliver MetroLink.
  • €3 million for Enterprise Ireland to set up Startup Ireland as a national entrepreneurship initiative.
  • €150 million over three years for workforce development, including AI and digital skills.
  • Maximum childcare fees fall from €735 to €550 a month, which matters for employees with young children.

What did not change

  • The 12.5% corporation tax rate on trading income.
  • The VAT registration thresholds of €42,500 for services and €85,000 for goods.
  • The general VAT rates.

What happens next

Many tax measures need new law and will be given effect through the Finance Bill later in the autumn. Some changes take effect immediately, such as the CGT rate from 7 October 2026, while most apply from 1 January 2027. Check the start date of each measure in the Budget documents before acting on it.

Frequently asked questions

Did Budget 2027 change the corporation tax rate?

No. The 12.5% rate on trading income is unchanged. The changes are to preliminary tax rules, the R&D tax credit and start-up relief.

Did the VAT registration threshold change in Budget 2027?

No. It remains €42,500 for services and €85,000 for goods.

What is the minimum wage in 2027?

€14.94 an hour from 1 January 2027, up from €14.15.

What is the new Capital Gains Tax rate?

31% for disposals on or after 7 October 2026, down from 33%. Development land disposals stay at 33%.

When do the income tax changes start?

From 1 January 2027.

Related guides

Sources

Updated 6 October 2026, Budget day, from the Department of Finance’s published Budget 2027 documents. This page is general information, not tax advice. Follow our Economy section for more coverage.

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