DURING THE RECENT Budget, the inheritance tax threshold was hiked up significantly in what was the first major change in five years.
Making the announcement in the Budget speech, Finance Minister Jack Chambers said it was “appropriate” to make the first increase in the rate since 2019 given the increase in property values since then.
Inheritance tax, technically known as the Capital Acquisitions Tax, is a tax of 33% on gifts and inheritances which kicks in at a particular limit.
It does not have to be paid if the inheritance does not reach this limit.
Inheritance from a parent to a child (including adopted or stepchildren) is counted as a “Group A” inheritance.
Within this group, the inheritance tax limit increased from €335,000 to €400,000.
Close to 97% of people will be unaffected by this tax change.
The Group B category limits also increased from €32,500 to €40,000 – this category includes siblings and nieces or nephews.
Within the third, Group C category – which is any relationship not covered by the first two categories – the threshold was increased from €16,250 to €20,000.
So with political parties making all types of pledges and promises in the run up to the general election, have they been saying anything on inheritance tax?
In its manifesto, Fine Gael said it “acknowledges the principle of inheritance tax but recognises that the burden of capital taxation has increased significantly over the past 15 years”.
The party said Ireland generates “above-average revenue from inheritance and gift taxes” and added that “recent fiscal drag has further cut the thresholds in real terms”.
The party has pledged to “build on progress made in Budget 2025” by increasing the inheritance tax threshold by raising the Group A threshold to €500,000, Group B to €75,000, and Group C to €50,000.
A spokesperson for Fine Gael told The Journal that the party is also “committed to reviewing the composition of the groups where the deceased does not have children”.
“In contrast, Fianna Fáil give few clear commitments in relation to their inheritance tax reforms,” said the spokesperson.
“While Sinn Fein commits to reforming Capital Acquisitions Tax as a revenue raising measure.”
Meanwhile, a Fianna Fáil spokesperson said the party “understands the imposition on people who inherit homes or farms due to the current threshold for inheritance tax”.
In a statement to The Journal, a spokesperson said inheritance tax rates “need to take property values into account”.
While the party noted increases in Budget 2025, it added that the “current thresholds are still lower than what they were in 2008”.
Inheritance tax is a tax of 33% on gifts and inheritances which kicks in at a particular limit, and Tánaiste and Fianna Fáil leader Micheál is in favour of reducing this rate from 33% to 25%.
The spokesperson added that the party is “conscious too of the very low thresholds when the deceased is childless” and will review this threshold – this Group C threshold is currently €20,000.
While no figures have been provided, Fianna Fáil’s manifesto pledges to “increase and adjust the inheritance tax thresholds in each budget to reflect the wider increase in property prices in the Irish economy in recent years”.
A spokesperson for Sinn Féin told The Journal that the party believes in a “tax system that is fair” and remarked that inheritance tax is an “important tool to tackle inequality and invest in public services to deliver a fair society”.
The party would revert the inheritance tax thresholds to pre-Budget 2025 levels and increase the rate from 33% to 36% – Sinn Féin say this would raise €143 million annually.
“We believe that people’s family homes are not the same as other forms of wealth – and shouldn’t be treated in the same way,” said the spokesperson.
“This is why we oppose the local property tax on family homes – and why we outlined our plan explaining how that could be abolished.”
Alan Shatter is a former Fine Gael TD and previously served, simultaneously, as Minister for Justice and Minister for Defence.
He is contesting the general election as an independent candidate in Dublin Rathdown and is chair of the Inheritance Tax Reform Campaign.
Shatter held public meetings and ran a campaign in the run up to Budget 2025 calling for an end to inheritance tax, which he claims is a “jealousy or resentment tax”.
In a statement to The Journal, he further described inheritance tax as “state sponsored grave robbery and double taxation”.
He added that it “forces the sale of modest sized homes that could provide home security for a bereaved child or grandchild and their family”.
Shatter said Sinn Féin’s “opposition to the property tax on homes while favouring the forced sale of homes to pay increased inheritance tax is bereft of any logical insight”.
Meanwhile, he noted that both Fine Gael and Fianna Fáil intend to retain the tax.
“Fine Gael has recycled an unimplemented promise first made during the 2016 general election that lacks any time frame for implementation,” said Shatter.
He added that Fianna Fáil has a “number of meaningless promises, including a pledge at some unspecified date to reduce the tax rate to 25%”.
“Should all their promises be implemented, the tax will still remain more draconian than it was 16 years ago, when the rate was 20%, and taking account of both the increase in the consumer price index and property values, the thresholds were higher.”
He added: “For example, up to 2008 a child could inherit a home from a parent up to a value of €542,000 without any inheritance tax hit”.
That sum would be equivalent to around €675,000 today, according to the Central Statistics Office.
“None of the Dáil parties yet get the extent of the public anger the tax generates,” said Shatter, “it should be abolished.”
Meanwhile, the Green Party said in a statement to The Journal that it would “prioritise increasing income tax bands and income tax credits to ensure the largest number of people possible benefit from any money that is set aside for tax reduction”.
In its manifesto, the party says it will exclude “wealthy farmers and business owners from agricultural and business relief”.
“Agricultural and Business relief from inheritance tax subsidised fewer than 2,500 people to the tune of over €400 million last year – a subsidy of almost €170,000 per claimant in one year alone,” the party said in its manifesto.
It added: “ESRI research has highlighted that these claimants tend not to be owners of small family farms and businesses – some of whom are currently struggling to stay afloat – but owners of larger enterprises.
“We would restrict this relief to assets worth three times the value of the average farm.”
In a statement to The Journal, a Labour spokesperson said the party isn’t proposing “any specific changes on inheritance tax in our manifesto”.
The spokesperson said Labour will develop a “Spanish style net wealth tax with a 1% levy on assets worth over €2 million excluding (up to specified limits) the family home, pension assets and family businesses and farms”.
In its manifesto, Labour said it will “broaden the tax base with increased taxes on wealth, not income” via a “net wealth tax like the Spanish model”.
A Social Democrats spokesperson noted that only around 3% of the population ever pay inheritance tax.
“It is only paid by a minority who inherit relatively large sums,” said the spokesperson.
The party spokesperson added that there is “no good reason to tax an inheritance, which is received by accident of birth, more favourably than productive activities like work”.
“In cases where a son or daughter is living in a home, which they have inherited from a parent, there is already a provision in law to facilitate inheritance tax being waived in certain circumstances,” said the spokesperson.
“For that reason, the Social Democrats do not favour any increase in the threshold at which inheritance tax is paid.”
And in its manifesto, that party said it would “examine the fairness and appropriateness of the current regimes around Business and Agricultural Relief” for inheritance tax.
Aontú, Independent Ireland, People Before Profit, and Right to Change did not respond to The Journal when asked for comment.
None of the above listed parties include anything specific to inheritance tax in their general election manifestos.
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