The Government is entering the final hours before Budget 2027 with negotiations still ongoing, after Taoiseach Micheál Martin‘s October 2 deadline for reaching agreement was missed.

Martin had hoped to avoid a repeat of last year’s last-minute negotiations, with the Budget package reportedly still being finalised over the weekend.

Attention will now turn to the measures Simon Harris and Finance Minister Jack Chambers will announce on Tuesday, with a number of tax and spending measures expected to feature prominently.

Tax cuts and fuel supports

One of the headline measures is expected to be an increase of around €2,000 in the income threshold at which workers begin paying the higher rate of income tax.

There is speculation that the Government could go further if an additional €500m is available. However, once tax credits are taken into account, the overall tax package is still expected to come in at around €1.2bn.

The Government is also expected to extend the existing excise reductions on petrol and diesel, despite the measures having already been announced several times.

The extension is likely to cost around €1bn and will be particularly significant given continued uncertainty in global energy markets.

A further measure aimed at encouraging saving could come through the proposed State-backed Savings and Investment Account (SIA).

The scheme could be accompanied by a tax incentive for savers, although any such measure is expected to be relatively modest, potentially costing around €50m.

Rural Ireland and childcare

A significant package for rural Ireland is also expected, reflecting political pressure to address declining support outside urban areas.

Measures could include cuts to the cost of kerosene, increased fuel supports for farmers and additional capital funding.

The overall package is expected to exceed €250m.

Childcare is another area where substantial funding could be allocated.

Children’s Minister Norma Foley has kept details of her plans closely guarded, but there is pressure within Government to help families facing what has been described as a “second mortgage” from childcare costs.

More than €500m could be allocated to childcare measures under a generous scenario.

USC, energy credits and welfare

Fianna Fáil is expected to secure a measure within the tax package, with the abolition of the USC remaining a key party objective.

However, wholesale abolition is not expected in this Budget and any USC changes are likely to cost less than €100m.

Another issue still being debated is the possibility of an energy credit aimed at households struggling with arrears.

The measure could cost up to €450m if introduced.

There is also uncertainty over the size of the increase in core social welfare and pension payments. The increase could be €7.50 or €10 per week, with the difference between the two options potentially adding around €200m to the overall cost.

Pressure on Government spending

Finance Minister Jack Chambers has warned that departments will not be able to rely on additional funding to cover overspending.

The Department of Health remains the biggest concern, while Justice and Education are also facing potential overruns.

Higher Education Minister James Lawless is also facing pressure over the €500 student contribution charge.

The current reduction in the charge costs just over €50m, while any move towards abolishing it entirely would require substantially more funding.

Such a move would also be politically significant for Simon Harris, who pledged to abolish the charge during the last general election.

Child poverty measure

Another major proposal under consideration is a second tier of Child Benefit targeted at lower-income families.

The ESRI has previously estimated that a means-tested payment could lift around 40,000 children out of poverty at a cost of just under €700m.

The scale and design of any such measure will be closely watched given Martin’s stated priority of tackling child poverty.

Public finances face further uncertainty

Beyond the measures already being considered, the Government faces significant uncertainty around the impact of international events and public spending.

The extension of fuel excise cuts into next spring could cost approximately €1bn, but a prolonged conflict in the Middle East or disruption to energy supplies could put further pressure on the public finances.

The Government is also preparing for negotiations on a new public service pay agreement.

The existing public service pay bill is understood to be around €34bn, meaning even a relatively modest new agreement could have a significant impact on the Exchequer.

Against that backdrop, the Government’s objective will be to deliver a Budget that provides tax and spending measures across key political constituencies while keeping a firm grip on the overall cost.

With negotiations running beyond the Taoiseach’s original deadline, the final hours before Tuesday’s announcement could yet produce further changes to the package.