Budget 2026 was unveiled by Minister for Finance Paschal Donohue and Minister for Public Expenditure Jack Chambers today.
The €9.4 billion package has been welcomed by Laois Fine Gael TD Willie Aird.
He particularly noted the cut in the VAT rate for small businesses which was announced in Budget 2026 this afternoon.
He said: “This reduction in VAT from 13.5% to 9% announced today will be a permanent measure and will help increase cashflow for restaurants, hairdressers and coffee shops who have expressed increasing financial stresses due to increased costs.”
While Deputy Aird also welcomed the fact that pensioners, carers and people with a disability will see their weekly payments increased by €10.
You can check out the main points of Budget 2026 below:
Household & Welfare
- Social welfare payments: Core weekly payments rise by €10, in recognition of inflation and cost-of-living pressures.
- Child support/Child payments: Increase of €8 per week for children under 12, and €16 per week for children over 12.
- Carer’s allowance / income disregard: The income disregard for Carer’s Allowance is raised significantly (to €1,000 single, €2,000 couples), expanding eligibility.
- Domiciliary Care Allowance: Up by €20, to €380 monthly.
- Double Christmas bonus: All long-term social welfare recipients receive a full extra payment in December 2025.
- Renters’ tax credit: The existing €1,000 renters’ tax credit is extended through the end of 2028.
- Mortgage interest relief: Extended for another two years (with a reduced rate in the final year).
- Education/student fees: A permanent cut in the student contribution (from €3,000 to €2,500) is introduced.
Labour, Wages & Taxation
- Minimum wage: Increases by €0.65 to €14.15 per hour from 1 January 2026.
- Universal Social Charge (USC): Adjustments ensure that those on the new minimum wage remain under the 2% rate threshold.
- VAT changes: Hospitality, food, catering, and hairdressing services: 13.5% to 9% from July 2026. The reduced 9% VAT on gas and electricity is retained until end‐2029 / 2030.
- R&D tax credit: Increased from 30% to 35%, and the first-year threshold is raised (from €75,000 to €87,500).
- Other tax measures: The tax rate on certain offshore / life assurance funds reduces from 41% to 38%. No change to personal income tax rates or structure in this budget. A new Derelict Property Tax will replace the 7% Derelict Site Levy (not lower than that rate).
- Carbon tax increases: rates on petrol/diesel and other fuels increase (e.g. from €63.50 to €71 per tonne for motor fuels).
- Stamp duty and other reliefs: Farm consolidation relief, restructuring relief, and young trained farmer reliefs extended to 2029.
Business, Enterprise & Innovation
- Enterprise funding: The Department of Enterprise, Tourism & Employment receives increased funds (~€1.3 billion).
- Support for small business / innovation: A new Small Business Unit and a Cost of Business Advisory Forum will be launched.
- R&D & tax incentives: As above, the more generous R&D credit is intended to make Ireland more attractive for research investment.
- Risk mitigation: The government is cautious about overreliance on a handful of high‑revenue companies and is deliberately avoiding sweeping tax cuts.
Infrastructure, Public Services & Capital Investment
- Capital Expenditure: 2026 will see ~€19.1 billion in capital expenditure.
- Transport, water, energy: Large shares of capital spending go into transport networks, water systems, energy infrastructure, and enabling housing supply.
- Health & education: Additional funding is allocated to expand capacity, modernize services, and manage demographic pressures.
- Housing delivery target: The government aims to complete ~25,000 new homes in 2026, including ~10,200 social homes.
Sport
- Funding of €3m for League of Ireland club academies, short of €4.45m requested by the FAI
- Funding part of €10.7m increase for Sport Ireland
- Additional €1.6m towards inter-county Gaelic games players. €983,000 for the GAA, €727,000 for the IRFU and further €1,5m for the GPA
Justice and defence
- Up to 1,000 trainee gardaí to be recruited next year, with a further 200 civilian staff
- Further intakes into garda reserve and €19m to increase the budget for garda overtime
- €39m pledged for the Irish Prison Service and €11m for Courts Service
- Over €6.7m for Irish Probation Service
- €11.5m additional funding for domestic and gender-based violence initiatives
- Overseas development aid increased by €30m
- Recruitment of 400 new Defence Forces members targeted
- New Defences Forces uniforms as well as a new body armour system
- Armoured personnel carriers will also be upgraded
Education
- Additional 1,717 Special Needs Assistants (SNAs) and 1,042 new teaching posts
- New teaching posts includes 860 additional teachers working across SNA settings in mainstream, special classes and special schools
- Additional funding for DEIS Plus and new DEIS plan
- Additional €50 for primary and special schools and €20 for post-primary under standard capitation rates paid to schools
Permanent €500 reduction in student contribution fees
Cigarettes and Alcohol
- Duty on a pack of 20 cigarettes to increase by 50c, likely pushing cost of most popular brands to almost €19 for the first time
- Excise duty on other tobacco products to rise on a pro-rata basis
- Tax of 50c per millilitre on nicotine-containing e-liquid for vapes announced in September to come into effect on 1 November
- This will add €1 to the costs of a standard 2ml disposable vape and double the typical cost of a 10ml bottle of liquid for reusable vapes from €5 to €10
- Excise duties on alcohol remain the same
Carbon Tax
- The carbon tax will be increased to €71 per tonne of CO2 emitted
- New rate to be applied to auto fuels tomorrow and other fuels such as coal, gas, home heating oil and briquettes, from 1 May 2026
- €5,000 VRT relief for electric vehicles to be extended by one year until end of 2026
- €1.1bn package to include investment in retrofitting public buildings
- €209m to go towards climate action plan and environmental leadership programme
- €3.5bn to ESB and EirGrid to strengthen energy security and accelerate transition to renewable energy
