Inheritance Tax in Ireland 2026: the New €420,000 Threshold and How to Plan

Reviewed by the advisory team at Greenway Financial Advisors Ltd. · Dublin · Updated October 2026

Inheritance tax rarely catches families out because the rules are complicated. It catches them out because nobody looked at the numbers until after a death. A family home in Dublin, a pension and some savings can push children over their threshold quickly. This guide explains how the tax works, what changed in Budget 2027, and the planning steps that actually reduce the bill.

How much can you inherit tax-free in Ireland?

Your tax-free amount depends on your relationship to the person leaving you the money or property. There are three groups. The figures below apply to gifts and inheritances taken on or after 7 October 2026.

Before 7 October 2026 the thresholds were €400,000, €40,000 and €20,000. The threshold that applies is the one in place on the date of the gift or inheritance. Anything above it is taxed at 33%.

Spouses and civil partners pay no inheritance tax on anything they receive from each other.

Can a child inherit €420,000 from each parent?

No. This is the most common misunderstanding we hear. The €420,000 threshold is a lifetime limit for everything a child receives within Group A, and that includes gifts and inheritances from both parents combined. Revenue adds together all taxable gifts and inheritances you have received in the same group since 5 December 1991.

So if your mother left you €200,000 in 2015, that counts against the same threshold when your father’s estate passes to you. You would have €220,000 of tax-free room left, not €420,000.

The groups are separate from each other, though. An inheritance from an aunt (Group B) does not use up any of your Group A threshold.

A worked example: a Dublin family home and savings

Mary is widowed and lives in Raheny. Her home is worth €700,000 and she has €260,000 in savings and investments. She plans to leave everything equally to her two children, neither of whom has received anything from her or their late father before.

Without planning, the family pays €39,600 between them. If the savings have been spent by then, the children may have to sell or borrow against the house to pay it.

With planning, Mary gives each child €3,000 a year under the Small Gift Exemption for ten years. That moves €60,000 out of her estate tax-free, and those gifts don’t count against the children’s thresholds. The bill halves to €19,800. A Section 72 life policy (explained below) can then cover what’s left, so the house passes on intact.

Figures are illustrative and use the thresholds that apply from 7 October 2026. Your own numbers will depend on what you own, who you leave it to and what they have already received.

Want to see what your family’s bill could look like? Call us on 01 853 2727 and we’ll run the numbers with you.

Estimate your own inheritance tax

Use this to get a rough figure. It doesn’t apply any reliefs or exemptions, so treat it as a starting point, not an answer.

The reliefs and exemptions that actually reduce the bill

Spouse or civil partner. Everything passing between spouses or civil partners is exempt. For married couples, the tax usually arises on the second death, which is why planning should look at both parents’ estates together.

The Small Gift Exemption. Anyone can give anyone else up to €3,000 a year tax-free. It applies per giver, per person receiving, per calendar year, so two parents can give each child €6,000 a year between them. These gifts don’t count against the child’s lifetime threshold. The exemption applies to gifts made during your lifetime only, not to inheritances.

The Dwelling House Exemption. A home can pass free of inheritance tax to someone who has lived in it as their only or main home for the three years before the inheritance, and who doesn’t own or have an interest in any other house. They then need to keep living there for six years, unless they are 65 or over when they inherit. A gift of a house during your lifetime only qualifies if it goes to a dependent relative, such as someone aged 65 or over, or someone permanently incapacitated.

Business Relief and Agricultural Relief. Both can reduce the taxable value of a qualifying business or farm by 90%. Business Relief generally needs the business to have been owned for five years before a gift, or two years before an inheritance on death. Agricultural Relief needs at least 80% of the person’s assets, after they receive the farm, to be agricultural property. The land also generally has to be farmed, or leased to someone who farms it, for at least six years. Both can be withdrawn if the assets are sold within six years. If you own a company, our guide to passing on your business covers this in detail.

Favourite niece or nephew relief. A niece or nephew who has worked in a family business or farm for the five years before receiving it can use the Group A threshold for those business assets, instead of the Group B threshold.

Is there a 7-year rule in Ireland?

No. The seven-year rule you may have read about is part of the British system. In Ireland, there’s no point after which a gift drops out of the calculation. Everything you receive within a group since 5 December 1991 is added together, for life.

There is a two-year rule, though. If someone makes a gift and dies within two years, the gift is treated as an inheritance. It’s still taxed at 33%, but it can change which exemptions apply, so check before making a large gift late in life.

How to pay the bill without selling the house

Inheritance tax is due by 31 October. If the inheritance is valued between January and August, the tax is due by 31 October that year. If it is valued between September and December, it’s due by 31 October the following year. You have to file a return if what you’ve received in a group goes over 80% of the threshold.

For many families, the problem isn’t the size of the bill, it’s finding the cash in time. That’s what a Section 72 policy is for. It’s a life insurance policy taken out specifically to pay inheritance tax. The proceeds are exempt from inheritance tax themselves, as long as they are used to pay the tax. Couples can take one out on a joint-life, second-death basis, which pays out when the second parent dies, when the bill usually arises.

Read our full guide to Section 72 and Section 73 policies, or call 01 853 2727 to get a quote from Ireland’s main life companies.

Pensions, gifts and the rest of your estate

• A pension or Approved Retirement Fund can pass to your family on very different tax terms. See what happens to your pension when you die.
• Helping a child with a house deposit now uses up part of their threshold if it’s above €3,000. See gifting money to your children.
• Giving away shares or property during your lifetime can trigger Capital Gains Tax as well as inheritance tax. See our Capital Gains Tax guide.
• For everything that changed in October, see Budget 2027: what it means for you.

When to get advice

The best inheritance tax planning happens years before anyone dies. Three moments are worth a conversation:

1. Making or updating a will. How you leave assets, and to whom, changes the tax bill.
2. Helping a child onto the property ladder. A large gift now uses up threshold that could otherwise shelter an inheritance later.
3. Selling or passing on a business or farm. Business Relief, Agricultural Relief and Capital Gains Tax reliefs all have conditions that need to be met well in advance.

Frequently asked questions

How much can you inherit without paying tax in Ireland?
A child can receive €420,000 from their parents over their lifetime without paying inheritance tax. Grandchildren, brothers, sisters, nieces and nephews can receive €44,000, and everyone else €22,000. These figures apply from 7 October 2026.

How much can a grandchild inherit tax-free?
€44,000 under the Group B threshold. If the grandchild is under 18 and their parent (the grandparent’s child) has died, they can use the Group A threshold of €420,000 instead.

Who pays inheritance tax in Ireland?
The person receiving the inheritance, not the estate.

What is the inheritance tax rate in Ireland?
33% on everything above your threshold. The rate didn’t change in Budget 2027.

How do I avoid inheritance tax legally?
Use the €3,000 Small Gift Exemption each year, check whether the Dwelling House Exemption, Business Relief or Agricultural Relief applies, plan around both parents’ estates together, and use a Section 72 policy to pay whatever bill remains.

General information for the 2026 tax year, using thresholds that apply to gifts and inheritances taken on or after 7 October 2026. Not personal advice. Sources: Revenue, Capital Acquisitions Tax thresholds, rates, groups, exemptions and reliefs pages.