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Heating costs from January 2027: what changes?

For home heating oil and gas, the carbon tax goes down, not up. Budget 2027 cuts it to €48.50 a tonne of CO2 and keeps it there for the lifetime of the Government. The Budget documents don't say a change starts on 1 January.

  • The Government puts the cut at €43 on a 1,000 litre fill of heating oil and €32 on a year of gas for a typical home.
  • The start date isn't in the Budget documents. The Finance Bill will set it. The rise due on 14 October 2026 doesn't happen for oil or gas.
  • Coal and other solid fuels go up on 1 May 2027, from €63.50 to €78.50 a tonne.
  • The Fuel Allowance goes up by €5 to €43 a week. The Budget documents don't give the start date.
  • To pay less for good: SEAI pays a €2,000 boiler scrappage grant when a heat pump replaces an oil or gas boiler, up to €14,500 for a house with the heat pump grant.

Published · How we know · Corrections

A white Netatmo wall thermostat mounted on a textured painted wall, its display showing 22 degrees.

A heating thermostat on a wall. The carbon tax is charged on the oil, gas and solid fuel a home burns for heat.

Overview of Netatmo Thermostat in Michle, Prague · Jiří Sedláček · CC BY-SA 4.0

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The detail

Oil and gas: what the Budget says

Your guide to Budget 2027, Climate Action and Carbon Tax: "In light of cost-of-living pressures, it has been decided the carbon tax will not increase in Budget 2027 as scheduled. The carbon tax on home heating oil (kerosene) and natural gas will be reduced to €48.50 t/CO2 and will be maintained at this rate for the lifetime of the Government."

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."

Before the Budget, the rate on home heating fuels was €63.50 a tonne and due to rise in October:

Department of Finance, TSG 26/09: "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."

The guide's figures for a typical fill of oil (€43, 1,000 litres of kerosene) and a year of gas (€32, 11,000 kWh) are its "impact on key typical fuel bundles in 2027". They are the carbon tax only, not the price of the fuel, which changes with the market.

Coal and other solid fuels

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"

Fuel Allowance

Budget 2027 Expenditure Report: "Increase the Fuel Allowance by €5 per week to €43 per week."

Fuel Allowance 2027 has who gets it and the SEAI grants it opens.

For your house

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. What the carbon tax adds has the Department of Finance's figures for a tank of oil and a year of gas.

Moving off oil or gas stops the carbon tax for good. SEAI's boiler scrappage grant:

SEAI, heat pump systems: "A €2,000 Boiler Scrappage grant where an oil or gas boiler, or an electric storage system, or solid fuel system is being removed. The grant is also paid Homeowners without central heating where a heat pump is being installed."

How we know

Sources

  1. gov.ie, Your guide to Budget 2027 (Government of Ireland, 6 October 2026), read 10 Oct 2026
  2. gov.ie, Budget 2027: Tax Policy Changes (Department of Finance, 6 October 2026), read 6 Oct 2026
  3. Tax Strategy Group TSG 26/09: Energy, Environmental and Vehicle Tax (July 2026), read 6 Oct 2026
  4. gov.ie, Budget 2027 Expenditure Report (6 October 2026), read 10 Oct 2026
  5. SEAI, Heat pump systems grant, read 10 Oct 2026

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