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The key employment and individual tax measures introduced in the Bill include:
As indicated on Budget Day, there will be a relaxation of the real-time reporting requirements that currently form part of ERR. The new reporting timeframe requirements will be made via the issuance of updated Income Tax (Employments) Regulations with effect from 1 January 2027.
The personal tax credit will be increased by €125 to €2,125 for single persons and by €250 to €4,250 in the case of married persons and civil partners jointly assessed to tax. Both the employee tax credit and earned income tax credit will also be increased from €2,000 to €2,125. In addition, the home carer tax credit will be increased by €100 to €2,050.
An increase in the Universal Social Charge (USC) 2% ceiling by €1,600 from €28,700 to €30,300 for the 2027 year of assessment onwards. This change is made in tandem with the increase in the national minimum wage applicable in 2027 and will ensure that the 2% rate remains the highest rate of USC that is charged on the income of a full-time worker on the national minimum wage.
An amendment extends the definition of a Relevant Capital Sum (relevant to the calculation of tax relief on termination payments) to cover a range of additional pension arrangements, including PRSAs. This amendment ensures that retirement lump sum entitlements under these arrangements must be incorporated when calculating the relevant tax exemptions such as the Increased Exemption and the Standard Capital Superannuation Benefit (SCSB). Individuals will continue to have the option to surrender an entitlement to a lump sum from the additional pension arrangements in order to avail of additional tax relief on the termination payment. This amendment should not impact employers with a sole pre-existing occupational pension scheme in place.
With respect to the tuition fee tax credit for third-level education, for the year of assessment 2026 and each subsequent year of assessment, the amount to be disregarded, in calculating the relief, shall be reduced by €650 for a full-time course (from €3,000 to €2,350) and €325 for a part-time course (from €1,500 to €1,175).
There is an increase in the exemption limit, to €20,000 per annum, for the provision of child-minding services in their own home where the relevant conditions are met.
From a Professional Services Withholding Tax (PSWT) perspective, Budget 2027 announced that the existing flat 20% withholding rate would be replaced with personalised deduction rates, subject to commencement order. However, no provision has been made within the Bill and its implementation therefore remains outstanding.
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