Dáil Éireann Debate, Thursday - 18 December 2025
209. Deputy Michael Cahill asked the Tánaiste and Minister for Finance to increase the inheritance tax threshold from €400,000 to €500,000 to account for increased asset values in both agriculture and residential homes; and if he will make a statement on the matter. [73183/25]
View answerCapital Acquisitions Tax (CAT) is a tax which applies to both gifts and inheritances and is charged at a rate of 33%. For CAT purposes, the relationship between the person giving a gift or inheritance and the person who receives it determines the maximum amount, known as the “Group threshold”, below which CAT does not arise. The group thresholds were most recently increased in Budget 2025.
The Group A threshold increased to €400,000 from €335,000. This threshold applies where the beneficiary is a child of the disponer. This includes adopted children, stepchildren and some foster children. Parents may also fall within this threshold where they take an inheritance from a child.
The Group B threshold increased to €40,000 in Budget 2025 from €32,500. This threshold applies where the beneficiary is a brother, sister, niece, nephew, or lineal ancestor or lineal descendant of the disponer. Following recent changes made to Capital Acquisitions Tax legislation, the Group B threshold also applies to persons who receive gifts and inheritances from the wider family of their foster parents, for example, from their foster siblings, uncles, aunts and grandparents.
The Group C threshold increased to €20,000 in Budget 2025 from €16,250, with this threshold applying to all other cases.
Along with tax free group thresholds, various reliefs and exemptions are available in relation to CAT, including agricultural and business relief. There is also the small gift exemption, favourite niece or nephew relief, and the dwelling house exemption.
In general, the availability of specific reliefs in respect of a particular tax head often requires a higher rate in order to generate an appropriate yield. It is important from a tax policy perspective to maintain stability and certainty, and to ensure that the CAT rate and thresholds are appropriately set in the context of the range of reliefs available.
There is a significant associated cost with further increasing the Group A threshold, but I recognise the burden of capital taxation. Further changes to the CAT rate and thresholds must be therefore considered among various demands within the overall Budget package, as they have been in the past. Further details of the costs of changes are available on the Ready Reckoner which was updated and published by Revenue after Budget 2026.
