Government sources describe Tuesday’s change as a statement of intent rather than a major reform. Here is the starting point.
Capital Acquisitions Tax is charged at 33% on gifts and inheritances above a tax-free threshold. The threshold depends on the relationship between the person giving and the person receiving, and the thresholds are lifetime limits, not per-gift amounts.
The current thresholds
Group A covers children inheriting from a parent, and the threshold is €400,000. Group B covers brothers, sisters, nieces, nephews, grandchildren and other lineal relatives, at €40,000. Group C covers everyone else, including partners who are not married or in a civil partnership, at €20,000. All three were last raised in Budget 2025.
Above those amounts, 33% applies. A child inheriting a €600,000 house from a parent faces a bill of €66,000 on the €200,000 above the threshold, assuming no other reliefs apply.
What is expected
The thresholds are set for modest increases, in line with previous adjustments, with one Government source calling the move a statement of intent. The Budget 2025 change raised Group A from €335,000 to €400,000, so a comparable step might take it to around €450,000. A final figure had not been settled as of Friday.
The Group B and C thresholds are the ones most often criticised as out of date. A niece inheriting from an aunt, or a long-term partner inheriting from someone they lived with for decades, hits 33% tax above €40,000 or €20,000 respectively. Grant Thornton and other advisers have pressed for those to rise more than Group A.
The reliefs that matter more
For many families the thresholds are less important than two reliefs. Dwelling House Exemption allows a person who has lived in the home for three years before the death, and continues to live there, to inherit it tax-free regardless of value, subject to conditions. Agricultural Relief and Business Relief reduce the taxable value of farms and businesses by 90%.
The small gift exemption, €3,000 per year from any one person to any other, is also unchanged and is the simplest planning tool available.
What to watch on Tuesday
The Group A figure will get the headlines. The Group B and C figures are the ones to check, because they affect far more people in modest circumstances and have been raised far less often.
