Negotiations within the Irish coalition government ahead of the October 6 Budget 2027 announcements indicate that the entry point for paying the higher 40 per cent rate of income tax will rise to at least €46,000.

Under current tax rules, single workers begin paying the top 40 per cent income tax rate on earnings above €44,000. Raising the threshold to €46,000 is expected to save higher-rate taxpayers up to €400 annually, or approximately €33 per month.

In addition to expanding the standard rate tax band, discussions between coalition partners are focusing on tax credits. When combined with anticipated adjustments to personal and PAYE tax credits, middle-income earners could see their annual take-home pay increase by more than €500.

The proposed tax adjustments follow a freeze on standard rate tax bands in the previous budget cycle. Government leaders have faced pressure to deliver income tax relief to offset fiscal drag as wage growth pushes more workers into the top tax bracket.

Budget talks are also examining potential minor adjustments to the lower rate of the Universal Social Charge (USC). Any USC adjustments may be aligned with recommendations from the Low Pay Commission to increase the national minimum wage.