Irish government to unveil €8.65 billion budget package with tax cuts and childcare caps

Expenditure and taxation package

The Irish coalition government will unveil Budget 2027 on Tuesday afternoon, delivering an overall financial package of €8.65 billion. Tánaiste and Minister for Finance Simon Harris alongside Minister for Public Expenditure Jack Chambers will present the measures during a 90-minute address in the Dáil chamber starting at 1pm. The package includes €7 billion in direct expenditure and €1.65 billion in taxation changes, expanding slightly on the initial targets outlined in the Summer Economic Statement. The coalition cabinet will convene on Tuesday morning to grant formal sign-off to the measures. Much of the additional outlay is designated as standstill funding to maintain current public services amid rising operational costs.

Household, tax, and childcare supports

Ministers will introduce a series of personal tax adjustments and cost-of-living measures intended to assist households as inflation climbs toward 4%. The entry threshold for paying the higher rate of income tax will rise from €44,000 to €46,500, contributing to an estimated €1,500 annual gain for a dual-income household where each partner earns €50,000. Childcare provisions include a monthly fee cap of €550 per child up to senior infants, designed to save parents approximately €1,000 annually. Minister for Children Norma Foley secured approval to raise the qualifying income threshold from €34,000 for free childcare, while childminders working from home will see their annual tax-free earnings ceiling increase from €15,000 to €20,000. The government will also introduce a new tax-free savings account and a culture card for teenagers to spend on events.

Taoiseach Micheál Martin described the guiding objective of the financial package ahead of its presentation.

The budget has to be about trying to ease the pressure on families and households.

Housing, energy, and social provisions

The package provides a €10 weekly increase to social welfare payments and a universal €150 reduction in third-level education fees. In housing, coalition leaders settled on a compromise to increase the Help-to-Buy grant from €30,000 to €35,000, though Minister for Finance Harris rejected proposals from Fianna Fáil to abolish the 1% stamp duty for first-time buyers. The rent tax credit will increase by €150 to €1,150 for single tenants and €2,300 for jointly assessed couples. On energy, planned carbon tax increases on heating oil and gas are paused, excise cuts on petrol and diesel are extended into spring, and more than €650 million will fund sustainable home energy upgrades. Other targeted measures include a €15 million tax rebate scheme on draught beer kegs for rural pubs, extended fuel supports for transport operators and farmers, and funding for 400 new Defence Forces recruits.

Fiscal surplus and spending targets

Ireland approaches the announcement backed by an expected general government surplus of €6.9 billion for 2026, reduced from the €9.2 billion forecast in April because of health sector overspends and fuel supports. A portion of the surplus will be directed into national wealth funds for future liabilities, though the Irish Fiscal Advisory Council has criticised the coalition for not saving a larger share. Opposition parties have proposed alternative spending plans, with Sinn Féin advocating for universal €400 energy credits and the Labour Party and Social Democrats calling for targeted €400 credits. On national accounts, Ireland's debt-to-GDP ratio stood below 35% at the end of 2025, compared with 101% in the United Kingdom and 115% in France. Budget 2027 sets a 5.9% increase in public spending, remaining just beneath the government's 6% annual spending growth cap.