Budget 2027: Renters' Tax Credit to Rise and Home Heating Oil Relief on the Cards, Taoiseach Confirms
Taoiseach Micheál Martin has confirmed that the renters' tax credit will be increased in Budget 2027, to be announced on October 6, while the government is also examining a range of measures to assist households struggling with home heating oil costs, as the pre-budget period intensifies ahead of what is expected to be a €1.5 billion tax package.
Background
The renters' tax credit was introduced in 2022 as part of a package of measures designed to ease the financial burden on private renters in Ireland, who face some of the highest rents in Europe relative to income. The credit currently provides up to €1,000 for an individual or €2,000 for a jointly assessed couple, and is available to tenants who pay rent on their principal private residence. Since its introduction, the credit has been increased incrementally in successive budgets, reflecting the government's recognition that the housing crisis continues to place severe pressure on renters' finances.
Home heating oil is a particular concern for rural households in Ireland, many of which are not connected to the natural gas network and rely on oil-fired central heating as their primary source of warmth. The cost of home heating oil has been volatile in recent years, driven by global energy market fluctuations and the impact of the conflict in Ukraine on European energy supplies. The government's carbon tax policy, which applies to home heating oil, has added to the cost burden for rural households, generating political pressure for relief measures.
Budget 2027 is being prepared against a backdrop of strong exchequer performance, with Ireland's corporate tax receipts running well ahead of forecast and a significant budget surplus projected for the year. The government has indicated that the €1.5 billion tax package will prioritise personal income tax reductions, but has signalled that there is room for targeted measures in areas including housing, energy costs, and childcare.
Key Developments
Speaking on Monday, Taoiseach Martin confirmed that the renters' tax credit will be increased in the budget, describing the credit as having had a "positive impact" on renters' finances. He acknowledged, however, that the government must also address the issue of low uptake among eligible renters, with many tenants unaware of their entitlement or unable to navigate the Revenue Commissioners' online system to claim it. Reports have suggested a potential increase of €300, which would bring the individual credit to €1,300 and the joint credit to €2,600, though Martin declined to confirm specific figures ahead of Budget day.
Tánaiste and Minister for Finance Simon Harris described himself as "positively disposed" to the increase, noting that while the bulk of the tax package is allocated to personal income tax, there is room for other measures. Harris also identified home heating oil as a significant issue for older people, low-income households, and those in rural areas, and indicated that the government is reviewing the planned restoration of excise duties on petrol and diesel, which was scheduled for November 2026, with the suggestion that it may not be "prudent" to proceed if prices remain elevated.
Additional measures under consideration include modifications to the carbon tax specifically for home heating oil, further interventions on the fuel allowance and living alone allowance, and additional solar panel grants to assist with the energy transition.
Why It Matters
The renters' tax credit has become one of the most politically visible elements of the government's housing policy, partly because it is one of the few measures that directly benefits renters rather than property owners or developers. Its annual increase has become a budget ritual, but the underlying housing crisis it is designed to address has not improved materially. Rents in Dublin, Cork, and Galway remain at record levels, and the supply of new rental accommodation continues to fall short of demand. The credit is a palliative, not a cure, and the government's critics have argued that it simply inflates rents by increasing renters' ability to pay.
The home heating oil question is more politically complex. The government's carbon tax policy is designed to incentivise the transition away from fossil fuels, and any relief on home heating oil costs risks undermining that signal. At the same time, the households most dependent on oil heating are often those least able to afford the upfront cost of switching to heat pumps or other low-carbon alternatives. The government's challenge is to provide short-term relief without permanently undermining the carbon tax framework.
Local Impact
For renters in Dublin, Cork, Galway, Limerick, and Waterford — where rents are highest relative to income — an increase in the tax credit will provide some financial relief, though the scale of the increase being discussed is modest relative to the cost of renting in those cities. For rural households in counties including Mayo, Roscommon, Donegal, and Kerry, where oil heating is the norm and the gas network does not reach, any relief on heating oil costs will be particularly welcome ahead of the winter months. The Revenue Commissioners have been asked to improve the accessibility of the renters' tax credit claim process, with a particular focus on older renters who may not be comfortable with online systems.
What's Next
Budget 2027 will be announced by Minister for Finance Simon Harris and Minister for Public Expenditure Paschal Donohoe on Tuesday, October 6. The full details of the renters' tax credit increase and any home heating oil measures will be confirmed on that date. The Dáil will debate the Finance Bill in the weeks following the budget announcement, with the measures expected to take effect from January 1, 2027. Opposition parties have called for more ambitious measures on housing and energy costs, and are expected to table amendments to the Finance Bill during the Dáil debate.
