Irish Budget 2027: What we know so far and what’s still needed for SMEs

Budget 2027 will be announced on Tuesday, 6th October 2026. Early signals point to a more restrained package than last year, €8.5 billion, compared to €9.4 billion in 2026, with an overarching focus on protecting reserves for the long term.

The “make work pay” theme suggests support is coming for middle-income workers and domestic businesses, though how far that support can stretch remains to be seen.

Here’s what we know so far, and what we’d like to see emerge from Budget 2027, with Irish businesses top of mind.

The Numbers

The Department of Finance has indicated an €8.5 billion package, split between €1.5 billion in tax measures and €7 billion in additional spending (€5.9 billion in day-to-day spending and €1.1 billion in capital investment across energy, water and transport infrastructure).

Income tax and USC: modest relief expected

For PAYE taxpayers, the key question is whether the higher 40% income tax rate threshold,

is also expected, in line with the Low Pay Commission’s recommended 5.6% rise to the minimum wage. Neither will turn the dial for average workers, but any gains will still be welcomed.

Cost of living, fuel and energy

The diesel rebate scheme for hauliers remains in place until 31 December, and the temporary fuel excise cut on petrol and diesel introduced in response to the Middle East conflict earlier this year looks set to continue beyond November with early indications suggesting it may remain in place until spring 2027.

Recent global conflicts have brought the second major fuel shock in under five years, strengthening the case for increased investment in renewable energy. That could mean accelerated capital allowances, wider eligibility for energy-efficient equipment, and incentives for clean technologies and renewable heating systems. Separately, the Government, led by the National Energy Affordability Taskforce (NEAT), is weighing up a lower VAT rate for electricity (likely requiring an EU derogation), a possible pause on planned carbon tax increases while energy costs remain high, and improved grants for retrofits, solar panels and battery storage. If it materialises, this shift toward incentivising renewable energy could both reduce costs and strengthen energy security for Irish businesses, though much will depend on grant eligibility criteria and how easy they can be accessed.

Investment, Savings and Capital Taxes

The much-anticipated Savings and Investment Account model for Ireland is looking increasingly likely. Modelled on similar schemes in the UK and Sweden, it would open consumers up to a broader range of regulated investment products in a more accessible way, encouraging people with cash sitting in low-yield deposit accounts to invest instead. According to the Central Statistics Office (CSO), the household saving rate for Q2 2026 was estimated at 19.9%, almost double that of UK households, so we do expect to see a strong uptake.

What we’d like to see for Irish SMEs

So, what could Budget 2027 do to better support Irish SMEs and business owners? For us, there are a few areas where targeted changes could make a real difference.

Income Tax

Removing the 3% USC surcharge on self-employed income above €100,000 would create greater tax equity between employees and the self-employed.

Capital Gains Tax

A reduction in the current 33% Capital Gains Tax (CGT) rate, which is high by international standards, and the reintroduction of CGT rollover relief would encourage investment in business assets and expansion.

Capital Acquisitions Tax

For Capital Acquisitions Tax (CAT), aligning reporting with the calendar year would simplify compliance, while any CGT rate reduction should also be reflected in the CAT rate to support transfer of wealth and business and farm succession.

Interest Deduction Regime

The current interest deductibility rules against taxable income are overly complex. Simplifying the way this works would improve clarity, reduce costs and support business investment.

R&D Credits

A continued commitment to the R&D tax credit regime, enabling companies to invest in innovation and research activity.

Start-up and SME Reliefs

Making reliefs such as Start-Up Relief for Entrepreneurs (SURE) and Employment Investment Incentive (EII) easier to access could help more SMEs and entrepreneurs benefit from them.

Will this be the pro-SME budget we’re hoping for?

For Irish SMEs, Budget 2027 is unlikely to answer every challenge. Ireland enters the Budget from a strong economic position, but global political instability, AI-driven disruption, inflation, energy instability, rising tariffs and supply chain fragmentation all make for a more complex environment.

We’ll be following the announcements on 6 October and looking closely at what they mean for Irish businesses and those that operate cross-border.

Watch this space for AAB’s Budget 2027 analysis.