Tax receipts could be up to €2bn higher than the estimated target for 2015.
A report by Goodbody Stockbrokers says strong domestic growth is the main reason the tax take - and is already ahead of schedule this year.
It says the government should focus the surplus on capital investment and VAT reductions over the next two years, in order to sustain the economic recovery.
"There is leeway for looser fiscal policy over the next two years. However, this leeway is limited by EU fiscal rules now enshrined in Irish law," it says.
"As a result, any spending increases/tax cuts must be prioritised. Our preference is for the government to focus on capital investment, reductions in income tax and VAT reductions is certain targeted areas," it adds.
The forecast says the government should make 'targeted' tax 'giveaways' in the budget, saying the economy is now in a 'sweet spot'.
GDP is expected to grow by 4.3% and 4.0% in 2015 and 2016, representing slight upgrades on previous estimates (of 4.2% and 3.8%).
In its quarterly Irish Economy Health Check, the firm says the budget deficit will fall to 1.9% this year.
Chief economist at Goodbody is Dermot O'Leary.
He told Newstalk Breakfast there has already been a tax overshoot in the first quarter, and he expects that to continue for the year.
