A new State-backed investment account with a €50,000 tax-free threshold, lower taxes on investment gains and higher inheritance tax thresholds were among the measures announced in Budget 2027.
On Tuesday, Minister for Finance Simon Harris, unveiled an €8.5 billion package, made up of €7 billion in spending and €1.5 billion in tax measures.
Under the new Personal Investment Account, the first €50,000 held will be tax-free, with a flat 1 per cent annual tax on the value above that. Savers will be able to contribute up to €12,000 a year, with no minimum.
Accounts are reported to open from July 1, 2027. Mr. Harris said an account worth €52,000 would pay €20 in tax for the year. He said the contribution limit, combined with the threshold, made it “extremely unlikely” that any tax would be due in the first few years, even where the maximum contribution is made.
Elsewhere on investments, Exit Tax on Irish and equivalent offshore funds and on Irish and foreign life assurance products, falls from 38 per cent to 35 per cent. The standard rate of Capital Gains Tax drops from 33 per cent to 31 per cent.
The eight-year deemed disposal rule remains, although Mr Harris said work on the wider regime would continue.
On pensions, the age-related valuation factors used to value defined benefit pensions against the Standard Fund Threshold will be revised. The new factors have not yet been published.
Inheritance tax thresholds rise across all categories. The parent-to-child limit increases from €400,000 to €420,000, the Group B threshold from €40,000 to €44,000 and the Group C threshold from €20,000 to €22,000. The 33 per cent rate is unchanged.
For workers, the standard-rate income tax band rises by €2,500 to €46,500 for a single person and the Personal, Employee and Earned Income Credits each increase by €125. The USC 3 per cent band now starts at €30,300.
Welfare and State Pension rates rise by €10 a week, the maximum Help to Buy refund increases by €5,000 to €35,000 and the Rent Tax Credit rises by €150.
The measures will be given legal effect through the Finance Bill, which is expected to provide further detail.
Individuals and business owners unsure how the measures apply to their own circumstances are advised to seek professional financial advice. The impact of the changes will vary depending on personal income, savings, pension arrangements and family situation.
Lisa Loughrey, CFP is a CERTIFIED FINANCIAL PLANNER. You can contact her through Fairstone Letterkenny (formerly John F. Loughrey Financial Services) by telephone on 074-9124002 or by email on [email protected]