The last two budgets have ‘decreased household incomes’ and failed to address cost of living challenges, according to the Dáil’s independent budget office.

Flash analysis of Budget 2027 has concluded that the Government’s polices have not done enough to stay ahead of price and wage growth forecasts through this and next year.

The Parliamentary Budget Office (PBO) said that while every household will be negatively affected, low-income households will be ones hardest hit.

Budget 2027 saw the announcement of a personal income tax package worth €1.3billion next year, €10 increases to core social welfare rates and cuts to childcare costs.

Tánaiste and Minister for Finance Simon Harris said the Government heard ‘loudly and clearly’ about the importance of income tax cuts, after none was announced last year.

While hinting that the Government intends to adjust income tax rates every year for the rest of its term, Mr Harris added that people ‘need to feel the benefit of economic growth in their daily lives’.

However, the PBO’s analysis says the Government’s policies in Budgets 2026 and 2027, despite the introduction of income tax cuts, have left families ‘worse off’.

The office, which offers independent advice to Oireachtas members on economic matters, said a big contributor to this decline in household income was the removal of cost-of-living supports this year.

The report states that the measures in Budget 2027 do not go far enough to outpace estimated price and wage inflation, which will eat into any savings earned through income tax cuts.

For all households, price inflation is expected to reduce disposable incomes by approximately 0.4%, leaving the poorest households in the country, in the lowest income decile, ‘hardest hit’.

The reduction in after-tax income for this cohort, caused by price and wage inflation, is expected to be double the average rate – at 1% and 2.4%, respectively.

The PBO states the policies in Budgets 2026 and 2027 have left middle-income households, who have been told to expect over €700 in tax cuts next year, worse off than in 2025.

Sinn Féin Finance spokesman Pearse Doherty told Extra.ie: ‘People do not just feel worse off. Many are worse off. That is the clear verdict of this report.

‘It cuts through the spin of this budget, and lays bare the reality facing workers and families.’

The Department of Finance and the Department of Public Expenditure were contacted for comment.