10 changes to watch for on Budget day

With Budget 2027 less than two weeks away, RTÉ's Economics and Public Affairs Editor David Murphy details what changes people can watch out for ahead of 6 October.

1. Energy

Energy will be the centrepiece of this Budget.

The Iran conflict resulted in a significant rise in crude oil prices, putting a financial squeeze on households and motorists.

Home heating oil cost about €900 for 1,000 litres last year but is now above €1,600.

Minister for Public Expenditure Jack Chambers said a lower rate of carbon tax on home heating oil is being considered, but warned the Government cannot entirely insulate consumers from rising global energy prices.

The Government cut the tax on diesel by 32 cent and petrol by 27 cent earlier this year.

Those reductions were due to taper off and expire over four dates beginning on 1 November.

Minister Chambers has indicated it will roll over those tax cuts into early spring as prices for petrol and diesel are well above €2 at most services stations.

There is also expected to be an increase in the fuel allowance paid to those on social welfare who qualify under a means test.

2. Childcare

The Government has put a lot of political capital into cutting the cost of childcare.

Self-employed childminders who look after children in the home can currently earn up to €15,000 tax free.

Minister for Finance Simon Harris is likely to raise that threshold, possibly to €20,000.

At present, 15,000 childminders can benefit from the relief which has remained unchanged since 2007.

There is also likely to be an increased allocation for the National Childcare Scheme which provides financial support for families with children in early learning and childcare.

3. Income tax

The point at which people pay the higher rate of tax is widely expected to rise. At present, earnings above €44,000 are taxed at 40%.

One possibility would be to increase that threshold by at least €2,000 to €46,000, which would mean taxpayers paying more at the lower rate of 20%.

While the Government may dress this up at a tax cut, in reality it is simply a threshold adjustment to take account of the fact that rising wages means more earnings falling into the higher tax bracket.

When the Government increases the threshold, it usually changes tax credits too. These reduce the amount of tax people are required to pay.

At present, the tax credit for a single person is €2,000 and there is an additional tax credit of €2,000 for an individual in employment.

Minister Harris says the changes will be worth a few hundred euro to taxpayers.

4. Minimum wage

The State's Low Pay Commission has recommended the Government increase the minimum wage by 79 cent an hour from €14.15 to €14.94.

In the past, the Government has accepted the recommendations from the Commission, but this year it is facing pressure to resist from employers who argue businesses are struggling with rising costs.

The Small Firms Association says while inflation has risen by 25% from 2016 to 2026, the minimum wage has increased by 54%.

Others, such as Social Justice Ireland, argue low-paid workers are struggling to make ends meet and it would be unfair not to grant them a pay increase during the energy price shock.

It is possible Minister for Enterprise Peter Burke will agree to a lower figure than the recommended 79 cent.

With any rise, the Government would be expected to increase the point at which full time workers on the minimum wage start paying the 2% rate of Universal Social Charge: this is to ensure the lower paid are not pushed into a higher rate of USC.

Read more: Govt to give fuel excise cut 'certainty for the winter' in Budget - Harris
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Govt may introduce tax break for childminders in Budget 2027 - Harris

5. Investment accounts

Further details of the Government's keenly awaited investment accounts will be announced in the Budget.

These accounts are designed to encourage consumers to put money into investments with higher returns, instead of sitting in savings accounts in banks which offer low levels of interest and fail to keep pace with inflation, meaning they fall in real terms.

The new accounts will be financially attractive with tax-free returns up to a designated limit, with a tax rate of around 1% paid above that threshold.

That is significantly better than existing tax arrangements.

The new accounts can be invested in shares, bonds and funds which will be invested in stock markets.

Exotic financial instruments such as cryptocurrencies and risky assets such as derivatives will be excluded.

The accounts are due to be available from financial institutions from next summer.

There will be no minimum contribution and no early exit penalties, but there will be a ceiling on how much savers can invest.

6. Housing

At present tenants can claim tax relief of €1,000 which reduces an individual's tax bill by €1,000.

This will go up in the Budget, possibly by €250 or €300. Oddly, not everyone entitled to it is availing of the benefit.

Also on the agenda is a possible increase to the rent-a-room scheme which allows homeowners to let a room tax-free up to €14,000.

7. Carers

There has been a significant campaign to scrap the limit on how much people can earn while still retaining the carers' allowance of €270 per week.

The Coalition committed to scrapping the means test for the allowance in the Programme for Government.

It has been aiming to reach that point over a number of budgets.

Last year it increased the carers’ allowance income disregard by €1,000.

It is expected to show more progress on this in the Budget.

8. Social welfare

Last year the Budget included an increase of €10 a week to the main social welfare rates for pensioners, people with disabilities, carers, jobseekers and lone parents.

It is expected there will be something similar this year.

9. Climate

With the rising cost of energy and evidence of the climate crisis obvious to everyone, the Government is expected to introduce measures on renewables.

There is expected to be a €600 grant for batteries which can store energy generated by solar panels. The batteries cost €3,000 to €4,000 for a unit which can store 5 kWh, or €4,500 to €6,500 for a battery which can store 10 kWh.

10. Inheritance

At present a son or daughter can inherit up to €400,000 tax free. However, a niece or nephew can only inherit up to €40,000.

There has been a prominent campaign to equalise the treatment of the two categories by childless couples who want to leave property to nieces and nephews. But Government sources ruled that out.

Instead, the Coalition is likely to announce a small increase to the thresholds for both groups as well as a third category including cousins, aunts, uncles and in-laws.