Did Budget 2027 change the carbon tax on home heating oil?

The plan before the Budget

Going into Budget 2027 on 6 October 2026, the carbon tax on home heating was due to go up eight days later. The Department of Finance set it out in its tax paper for this Budget:

Department of Finance, Tax Strategy Group paper TSG 26/09 (July 2026): "The current Carbon Tax is €71 per tonne of CO2 emitted (t/CO2) for auto fuels and, due to the deferment of 1 May carbon tax increases, €63.50 t/CO2 on all other fuels. This will increase to €78.50 t/CO2 on 14 October 2026 for auto fuels and €71 t/CO2 for other fuels."

"Other fuels" means what homes burn for heat: home heating oil, gas and solid fuels such as coal. The rise on heating fuels usually comes in May, not October, and the paper says why:

TSG 26/09: "The carbon taxes applied to other fuels, such as solid fuels, natural gas, kerosene (home heating oil), and MGO, are legislated to increase on 1 May each year. This delayed increase is to minimise the impact on households during the Winter heating season."

This year the May rise was put back to October:

TSG 26/09: "the Government also announced a deferral in the planned 1 May 2026 carbon tax increase until 14 October 2026. This impacts MGO and other fuels such as kerosene heating oil, natural gas and solid fuels."

So homes that heat with oil or gas faced two rises close together: one on 14 October 2026, and the next on 1 May 2027. The Budget cancelled both for oil and gas (below).

TSG 26/09: "In line with the carbon tax trajectory, the carbon tax on other fuels is scheduled to increase to €78.50 t/CO2 on 1 May 2027."

What the old plan added to a tank of oil or a year of gas

The same paper works out the carbon tax in some typical amounts of fuel. It says the figures include VAT:

TSG 26/09: "The below table outlines the impact of the increases, inclusive of VAT"

The gas row is a year of gas for a typical home:

TSG 26/09, footnote 35: "The Commission for Regulation of Utilities (CRU) estimates the average household usage of natural gas at 11,000 kWh"

These are the carbon tax only, not the whole price of the fuel. After the Budget, the oil and gas rows no longer apply; the coal row's two steps come together on 1 May 2027.

What Budget 2027 decided

The table above is the plan going into the Budget. For oil and gas, the Budget replaces it. The Department of Finance's Tax Policy Changes, published on budget day, say:

Department of Finance, Budget 2027 Tax Policy Changes, 5.1: "Carbon taxes on kerosene and on natural gas will be reduced to €48.50 t/CO2 emitted until 2030."

So instead of rising on 14 October and again on 1 May 2027, the carbon tax on home heating oil and gas goes down, and stays down until 2030. The document does not give the date the lower rate starts; the Finance Bill will.

Coal and other solid fuels are treated differently. They skip the 14 October rise, then:

Budget 2027 Tax Policy Changes, 5.1: "there will be a double increase in the rate on 1 May 2027 such that the rate increases from €63.50 per tonne of CO2 to €78.50 per tonne of CO2"

The carbon tax cut on home heating oil works out what it is worth a year for each type of house and BER, from SEAI's BER certificates, and sets it against a heat pump after grants.

Where it goes after 2027

Before the Budget, the tax was set to keep rising each year to 2030. The Budget takes oil and gas off that path until 2030; other fuels stay on it:

TSG 26/09: "would incrementally increase the carbon charge by €7.50 t/CO2 until 2029, with a final increase of €6.50 t/CO2 in 2030, when the carbon tax would reach €100 t/CO2."

Where the money goes

Some of what the carbon tax raises pays for home energy grants:

TSG 26/09: "Ireland’s carbon tax revenues fund decarbonisation measures including retrofit schemes and agri-environmental measures."

Paying less carbon tax for good

The carbon tax is paid on the fuel a home burns. A home that burns less, or stops burning oil or gas, pays less of it every year, whatever the Budget does.

• Moving off oil or gas. SEAI now pays a boiler scrappage grant of €2,000 when a heat pump replaces an oil or gas boiler. With the heat pump and radiator grants, that is up to €14,500 for a house, from SEAI's heat pump grant.
• Burning less. Attic insulation, wall insulation and heating controls each have their own grant.
• Should you wait for the Budget? Budget 2027 and SEAI grants sets out what SEAI did the last times grants went up.

Check my home to see which jobs suit your home, what the grants add up to and the order to do them in.