Budget 2027 for Small Businesses and Sole Traders in Ireland

Like most Budgets, it is a long list of measures, many of which have little to do with running a small business. This guide leaves those out and focuses on what affects the money a sole trader keeps, what it costs to employ people, and which reliefs and supports are changing for businesses that are starting or growing. Every figure here comes from the Department of Finance and other official Government sources listed at the end of the guide.

Budget 2027 for small businesses at a glance

Budget 2027 measures most relevant to small businesses and sole traders

Measure	What changed	Effective date	Who it affects
Standard rate band	Up €2,500, from €44,000 to €46,500 (single person)	1 January 2027	Sole traders, partners and employees paying tax at 40%
Earned Income Credit	Up €125, from €2,000 to €2,125	1 January 2027	Self-employed people and proprietary directors
Personal and Employee Tax Credits	Each up €125, from €2,000 to €2,125	1 January 2027	Income taxpayers, including your employees
USC 2% band	Upper limit up €1,600, from €28,700 to €30,300	1 January 2027	Anyone paying USC
National Minimum Wage	Up from €14.15 to €14.94 an hour	1 January 2027	Employers with staff on or near the minimum wage
Employer PRSI threshold	Up from €552 to €600 a week	2027	Employers, especially of lower-paid staff
Capital Gains Tax	Standard rate cut from 33% to 31%	Disposals on or after 7 October 2026	Anyone selling business assets, shares or a business
Start-up company relief	Extended by four years	Now runs to 31 December 2030	New limited companies
R&D tax credit	First-year payment threshold up from €87,500 to €105,000, plus other changes	To be confirmed	Companies claiming the R&D credit

Budget tax measures take effect through the normal Finance Bill process. The employer PRSI threshold change applies for 2027; check the Department of Social Protection’s PRSI guidance before running your first 2027 payroll.

Income tax changes for sole traders

As a sole trader you do not pay corporation tax. You pay income tax, USC and PRSI on your business profits through self-assessment, so the personal tax changes in the Budget apply directly to the profit you make from the business. A limited company pays corporation tax on its profits instead, and its directors pay income tax on the salary they draw.

The standard rate band

The standard rate cut-off point, the amount of income taxed at 20% before the 40% rate applies, rises by €2,500 from €44,000 to €46,500 for a single person from 1 January 2027, with proportionate increases for married couples and civil partners. If your profits are above the old cut-off point, €2,500 more of them will be taxed at 20% rather than 40%.

The Earned Income Credit

The Earned Income Credit is the self-employed equivalent of the Employee Tax Credit. It rises by €125, from €2,000 to €2,125, from 1 January 2027, the same increase as the Employee Tax Credit and the Personal Tax Credit. A tax credit reduces the tax you pay euro for euro, so a sole trader who can use the full credit pays up to €125 less income tax from the Earned Income Credit increase, and up to €125 less from the higher Personal Tax Credit.

USC

The upper limit of the 2% USC band rises by €1,600, from €28,700 to €30,300, so less income is charged at the 3% rate.

Getting the benefit of these changes depends on knowing your profit figure with reasonable confidence. If you are still piecing it together from bank statements at the end of the year, our guide to accounting software for sole traders explains what you actually need to keep records up to date, and our accounting software comparison sets the main providers side by side.

National Minimum Wage and employer costs

The National Minimum Wage rises from €14.15 to €14.94 an hour from 1 January 2027, an increase of 79 cent. If you employ staff on or close to the minimum wage, your hourly pay costs will rise from the first pay period of the new year.

To soften the effect on employers, the weekly earnings threshold for the higher rate of employer PRSI rises from €552 to €600 for 2027.

In practice, this means:

• check that every hourly rate in your payroll is at least €14.94 from 1 January 2027, including for part-time staff;
• budget for higher wage costs where staff are paid at or near the minimum, and for any knock-on effect on pay differentials;
• expect a partial offset in employer PRSI for lower-paid employees, depending on their weekly earnings.

The exact effect on your wage bill depends on your staff’s hours and pay, so it is worth running your own 2027 payroll figures, or asking your accountant or payroll provider to, rather than relying on a rule of thumb.

Separately from the Budget, PRSI rates are also rising in stages under the Government’s existing PRSI roadmap. Check the current employer and self-employed rates in the Department of Social Protection’s guidance when you set your 2027 budget.

Capital Gains Tax changes

The standard rate of Capital Gains Tax falls from 33% to 31% for disposals made on or after 7 October 2026. This is the rate that applies to a gain on selling or otherwise disposing of an asset, such as business property, equipment or shares, unless a special rate or relief applies.

For a small business owner, this matters most if you are selling a business, part of a business, shares in a company or a business premises. It does not apply to your trading profits, which are taxed under income tax or corporation tax.

Start-ups and growing businesses

Tax relief for new start-up companies

The corporation tax relief for certain new start-up companies, known as section 486C relief, is extended by four years to 31 December 2030. It relieves corporation tax on trading income, and certain capital gains, for a new company’s first five years of trading. Revenue’s guidance explains that full relief is available where the company’s corporation tax liability is under €40,000, with marginal relief up to €60,000, and that the relief is linked to the employer PRSI the company pays. If you are thinking about setting up a limited company, Revenue’s page on tax relief for new start-up companies sets out the conditions.

Reliefs for founders and investors

The Budget also extends the Employment Investment Incentive (EII), the Start-up Capital Incentive (SCI), Start-up Relief for Entrepreneurs (SURE) and the Relief for Investment in Innovative Enterprises, also called Angel Investor Relief. These extensions are subject to the adoption of the EU’s new General Block Exemption Regulation for State aid. They are most relevant if you are raising outside investment or have left employment to start a business.

Startup Ireland

Budget 2027 provides €3 million for Enterprise Ireland to establish Startup Ireland, a national entrepreneurship initiative intended to act as a single entry point for founders. Check Enterprise Ireland for details as they become available. In the meantime, the National Enterprise Hub is the Government’s starting point for finding business supports.

Finance for growing businesses

For established SMEs looking for longer-term finance, the Department of Enterprise, Tourism and Employment’s 2027 allocation continues to support the Growth and Sustainability Loan Scheme, which offers State-backed loans through participating lenders. Check the scheme page for current loan sizes and eligibility.

Business investment and innovation

The Research and Development (R&D) tax credit is mainly used by larger companies, but several Budget 2027 changes are aimed at smaller claims:

• Faster cash flow for smaller claims. The amount payable in full in the first year rises from €87,500 to €105,000, rather than being spread over three annual instalments.
• More room to subcontract. The limits on R&D that can be subcontracted to universities and other third parties rise from 15% to 20%, and from €100,000 to €200,000.
• Wage costs. A new enhancement is being introduced for qualifying R&D wage costs.

If your company develops new products or processes, these changes may make a claim more worthwhile. R&D claims have detailed conditions, so a specialist adviser is usually needed.

Employer reporting and administration

For employers, the practical administration point is getting the new figures into payroll from the start of 2027:

• Tax credits and bands. Employees’ new credits and standard rate cut-off points reach you through Revenue Payroll Notifications (RPNs), so make sure your payroll software retrieves the latest RPNs for the first pay date of 2027.
• Minimum wage. RPNs do not include pay rates, so update any hourly rate below €14.94 yourself.
• Employer PRSI threshold. Check that your payroll software has been updated for the €600 threshold before you run 2027 payroll.
• USC bands. The wider 2% band is applied through payroll in the same way as the tax changes.

If you run payroll yourself, check that your software provider has confirmed its 2027 update. If you use a bookkeeper or accountant, confirm they have the new minimum wage rates for your staff.

What should a small business do now?

None of these changes require immediate action for most businesses, but a short review before January is worthwhile:

1. Revisit your 2027 tax estimateIf you are a sole trader, check how the wider standard rate band and higher credits affect what you expect to keep from your profits and what you can safely draw.
2. Review your payroll budgetIf you employ staff, work out the effect of the €14.94 minimum wage and the €600 employer PRSI threshold on each employee.
3. Check support eligibilityIf you are starting, raising investment or growing, check whether the extended start-up reliefs or new supports apply to you, and watch for details of Startup Ireland.
4. Review your finance and recurring costsA new tax year is a natural point to review borrowing, payment processing, software, insurance and other regular costs.
5. Get advice where it mattersFor a business sale, an R&D claim, incorporation or anything that depends on your personal circumstances, speak to an accountant or tax adviser.

Reviewing your business costs for 2027?

The start of a new tax year is a useful time to look again at the services your business pays for every month. Small differences in fees and subscriptions add up over a year, and some plans change price after an introductory period. Our independent comparisons and guides cover four of the most common:

• Accounting software

  Entry plans, users, bank feeds and VAT tools for Irish small businesses.

• Card payments

  Transaction fees, card machines and online payment options.

• Business insurance

  The main types of cover and how to compare policies.

• Business websites

  Website builders, freelancers and agencies, and what each really costs.

Budget 2027 for small businesses: frequently asked questions

Official sources

• Department of Finance: Budget 2027 Tax Policy Changes (income tax, USC, Capital Gains Tax, start-up reliefs, R&D tax credit)
• Revenue: Tax relief for new start-up companies (how the start-up company relief works)
• Department of Finance: Statement by Minister Harris on Budget 2027 (National Minimum Wage, employer PRSI threshold, start-up investment reliefs)
• Department of Public Expenditure: Statement by Minister Chambers on Budget 2027 (Startup Ireland, Growth and Sustainability Loan Scheme funding)
• Department of Enterprise, Tourism and Employment: Growth and Sustainability Loan Scheme (scheme details)

General information about Budget 2027, not personalised tax, legal or financial advice. Ask your accountant or tax adviser about your own circumstances. Official sources were checked on 7 October 2026.