Budget 2027: What Does It Mean for Your Financial Plan?

Budget 2027 has introduced several changes that will affect household finances, your future investment decisions, retirement planning, and the way families plan for the future. While much of the Budget commentary has focused on the cost of living, there are several measures that are particularly relevant from a financial planning perspective and we have outlined the key changes we believe you should be aware of.

1. Income tax: a modest increase in take-home pay

The standard-rate income tax band will increase by €2,500 to €46,500 from 1 January 2027. 

The personal tax credit, PAYE tax credit and Earned Income Tax Credit will each increase by €125. The Home Carer Tax Credit will also increase by €100, to €2,050.

For someone earning above the new €46,500 threshold, the increase in the tax band can be worth up to €500 a year, while the increase in the main tax credits can provide a further €250 of tax relief for an individual who can fully utilise them.

Financial planning consideration:

Rather than simply absorbing any increase in take-home pay into everyday spending, this may be an opportunity to review your longer-term financial plan.

For example, additional disposable income could be directed towards:

• Pension contributions
• Mortgage overpayments
• Investment
• Building an emergency fund
• Protection
• Funding future education costs
• A specific medium- or long-term financial goal

Small increases in regular savings can make a significant difference when maintained over many years.

2. A new Personal Investment Account from July 2027:

One of the most significant announcements for investors is the introduction of a new Personal Investment Account from 1 July 2027.

The account will allow Irish-resident individuals aged 18 and over to invest up to €12,000 per year, with a €50,000 tax-free threshold. A flat 1% tax will apply to the value of the account above €50,000. Providers will be responsible for the administration and payment of the tax. Eligible investments are expected to include shares, bonds, ETFs and certain investment funds. Investments within the account will not be subject to Capital Gains Tax, Dividend Withholding Tax, Investment Undertaking Tax or Life Assurance Exit Tax, and the deemed disposal rules will not apply within the account. This could become an important additional option for individuals who have surplus cash available for long-term investment but have already considered or maximised their pension funding.

However, it is important not to view the new account as a replacement for a pension. Pensions continue to offer valuable tax relief on contributions and remain central to long-term retirement planning.

Financial planning consideration:

Before investing through the new account, it will be important to consider how it fits alongside your pension, existing investments, mortgage, cash reserves and overall financial objectives. The detailed rules will be set out in upcoming legislation, so we will be monitoring the development of the scheme before making recommendations.

3. Tax on your Investments is Reducing:

From 1^st January 2027, the tax rate applying to the majority of common investment funds and life assurance investment products will reduce from 38% to 35%. This includes Investment Undertaking Tax and Life Assurance Exit Tax, as well as certain equivalent offshore funds and policies. Separately, the standard rate of Capital Gains Tax will reduce from 33% to 31% for disposals made from 7^th October 2026.

 Financial planning consideration:

Tax is only one factor when deciding whether to sell or restructure an investment. Investment decisions should continue to be based primarily on your objectives, time horizon, risk profile and the role the investment plays within your overall financial plan so we will be happy to discuss this further with you if you wish.

4. Your Retirement Planning:

There were no major changes announced to the fundamental tax treatment of private pension contributions in Budget 2027. However, the Standard Fund Threshold is particularly relevant for higher-value pension funds.

Under legislation already introduced, the threshold increases to €2.4 million for 2027, rising to €2.8 million by 2029.

For individuals approaching these levels, retirement planning needs to consider not only how much to contribute, but also the timing of contributions, investment growth, retirement dates and the interaction between different pension arrangements.

The State Pension (Contributory) maximum personal rate will rise from €299.30 to €309.30 per week, and the State Pension (Non-Contributory) from €288 to €298 per week. The Fuel Allowance increases by €5 per week, the Living Alone Allowance by €3 to €25 per week, and a Christmas Bonus will be paid in 2026. State Pension age remains at 66, with the option to defer the State Pension (Contributory) up to age 70 for an increased payment.

 Financial planning consideration:

For business owners and higher earners, pension planning should form part of a wider strategy rather than being viewed simply as a tax-saving exercise. The objective is to build sufficient retirement capital while ensuring that contributions, investment risk and eventual benefits remain aligned with your long-term financial objectives.

5. Inheritance Tax Thresholds Increase:

The Budget also increases the Capital Acquisitions Tax (CAT) thresholds. For gifts and inheritances received from 7 October 2026, the thresholds increase to:

Relationship	Previous threshold	New threshold
Group A – principally children	€400,000	€420,000
Group B – siblings, nieces/nephews and certain other relatives	€40,000	€44,000
Group C – other relationships	€20,000	€22,000

The CAT rate remains at 33%.

While these increases are relatively modest, they reinforce the importance of considering inheritance and lifetime gifting as part of a broader financial plan.

Financial planning consideration:

If you are building significant wealth, it is worth considering not just how much you need to fund your own lifestyle and retirement, but also how and when you ultimately want to pass wealth to the next generation.

Effective estate planning can involve pensions, investments, property, lifetime gifts, wills and the use of available CAT exemptions so we will be happy to discuss this further with you if you wish.

6. Renters & First-Time Buyers:

The Rent Tax Credit will increase from €1,000 to €1,150 for a single person and from €2,000 to €2,300 for a jointly assessed couple.

For first-time buyers, the maximum Help-to-Buy relief increases from €30,000 to €35,000, effective from 7 October 2026.

These measures may improve cashflow for some households, but they should be considered alongside the wider affordability of buying a property, mortgage repayments, deposit requirements and your longer-term financial objectives.

7. Families & Household Cashflow:

Childcare costs will be capped at €550 per month for children up to Senior Infants from September 2027, while a number of family and social welfare supports will also increase.

For families, the combined impact of tax changes, childcare supports and other measures could provide additional disposable income.

The Bigger Picture:

Budget 2027 provides some additional financial flexibility for many households, but the most important question is not simply “How much will I save in tax?” It is: “How can I use these changes to improve my financial wellbeing over the long term?”

For some clients, that may mean increasing pension contributions. For others, it may mean investing surplus cash, reducing debt, reviewing protection, or putting a more structured inheritance plan in place.

The introduction of the new Personal Investment Account also creates an additional option for long-term investors, although the detailed legislation and practical operation of the account will need to be considered once available in the Finance Bill due to be published next week. At Eolas Money, we believe Budget changes are best viewed in the context of your wider financial plan rather than in isolation.

This newsletter is for information purposes only and does not constitute personal financial or tax advice. The detailed implementation of certain Budget measures remains subject to legislation and Revenue guidance and review of the Finance Bill which is due to be published next week.