Budget 2027
Budget 2027: carbon tax, fuel, EVs and home energy
Last updated 16 October 2026
Carbon tax on home heating oil and gas falls to €48.50 a tonne. The motor fuel rise waits to May 2027; electric car registration relief runs to 2028.
Budget 2027 changes how fuel, heating and cars are taxed. The tax changes take effect when Finance (No. 2) Bill 2026 is enacted, from the dates below. Figures are from the Department of Finance's Tax Policy Changes document.
Carbon tax
| Fuel | Change |
|---|---|
| Petrol and diesel | Rise to €78.50 a tonne of CO2 deferred from 14 October 2026 to 1 May 2027; a further rise on 13 October 2027 |
| Kerosene and natural gas | Cut to €48.50 a tonne until 2030 |
| Marked gas oil (green diesel) | Rises deferred to 1 May 2027 and 13 October 2027 |
| Solid and minor fuels | Rise to €78.50 on 1 May 2027 |
The Government's Budget in Brief estimates the effect on typical purchases in 2027. A 60-litre fill costs about €1.28 more for petrol and €1.48 more for diesel. Gas costs €32 less on 11,000 kWh, and kerosene €43 less on 1,000 litres.
Petrol and diesel excise
The temporary cut in the non-carbon part of mineral oil tax continues for now. Then it is restored in steps. The first is on 28 February 2027, with further increases on 8 April and 1 May 2027. Petrol and diesel are fully restored on 30 June 2027.
Cars
- Vehicle Registration Tax (VRT) relief of up to €5,000 on electric vehicles, due to end in 2026, is extended to the end of 2028
- from 1 January 2027, VRT rates for cars in bands 3 to 20 (over 80g/km of CO2) rise by 1 percentage point. Bands 1 and 2 are unchanged
- under Budget 2026, the €10,000 reduction in a company car's value for benefit-in-kind falls to €5,000 for 2027
Selling electricity from solar panels
Income from selling electricity you generate at home back to the grid is exempt from income tax, USC and PRSI up to a limit. The limit rises from €400 to €600. For someone on €60,000 selling €550 a year, once the higher limit applies:
| Tax on the €150 above the old limit | €64.50 |
| Tax with the new limit | €0.00 |
| Saving | €64.50 |
Home energy upgrades
The Budget allocates €654.5 million to home energy upgrades in 2027. Landlords can also deduct up to €10,000 per home for grant-aided energy work. See the retrofitting deduction. The 9% VAT rate on electricity and gas runs to the end of 2030, under Budget 2026.
Work it out
Sources
- Department of Finance: Budget 2027: Tax Policy Changes (checked 25/10/2026)
- Government of Ireland: Budget in Brief 2027 (checked 25/10/2026)
- Citizens Information: Budget 2027 (checked 25/10/2026)
General information, not tax advice. HeyPenny is not a tax agent.