Budget 2027 Increases Capital Acquisitions Tax Thresholds Across All Categories
Budget 2027 delivers increased Capital Acquisitions Tax (CAT) thresholds across all three categories, raising the tax-free limit for children inheriting from parents to €420,000 from €400,000. Tánaiste Simon Harris confirmed the adjustments, though the changes stop short of wider reforms demanded by interest groups who argue the system discriminates against childless citizens.
Category Breakdown of the New Tax-Free Limits
The updated thresholds apply equally to gifts received in excess of the €3,000 annual small gift exemption. Category A, covering children inheriting from parents, moves from €400,000 to €420,000. Category B, which covers close blood relatives including grandparents, great-grandparents, siblings, aunts, and uncles, increases from €40,000 to €44,000. Category C, encompassing all other inheritances and gifts to non-relatives or unmarried partners, rises from €20,000 to €22,000.
The End Discrimination in Inheritance Tax (Edit) group criticized the limited adjustments. James Sexton of Edit stated that the government continues to reinforce structural discrimination by failing to deliver deep reform, noting that Taoiseach Micheál Martin and Tánaiste Simon Harris previously acknowledged systemic unfairness for childless citizens. Julia Considine of Grant Thornton added that Budget 2027 missed an opportunity to set out a roadmap addressing the fundamental imbalance where beneficiaries in Groups B and C generated almost €3 in every €5 of inheritance tax receipts in 2025 despite lower thresholds.
Tax Revenue and Historical Context Since the Financial Crash
The state collected €1.1 billion in CAT during 2025, with gift tax accounting for just 15 percent of that total, according to Parliamentary Budget Office figures. While CAT accounts for just 1 percent of total exchequer receipts, collections have surged by more than 30 percent in each of the past two years, up sharply from €391 million recorded in 2007. By comparison, in 2008, Group A beneficiaries could inherit over €521,000 tax-free under a 20 percent tax rate before successive governments lowered thresholds and raised the tax rate to its current 33 percent level.
Political Constraints and Criticisms Over the Cost of Equalization
Mary Moran, tax director at Baker Tilly Ireland, described the threshold increases as modest, warning that continued inflation will erode a substantial portion of the benefits. John Cuddigan of RDJ observed that the new thresholds remain lower than levels seen following the financial crash in 2009 when adjusted for property price growth, while Liam Kenny, tax partner at RSM Ireland, argued that widespread reform remains necessary to align the tax regime with modern family circumstances.
What Are the Current Inheritance Tax Rates and Thresholds?
What is the current tax rate applied to inheritances above the threshold?
Inheritances and gifts exceeding the tax-free thresholds are taxed at a rate of 33 percent.
Which category generates the highest share of inheritance tax revenue?
Category B beneficiaries account for the largest share of collections at €449 million, followed closely by Category A beneficiaries at €398.9 million, based on Parliamentary Budget Office data.
What annual exemption applies to gifts before CAT thresholds are triggered?
Thresholds apply equally to gifts received in excess of the €3,000 annual small gift exemption.
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