The Minister for Finance, Paschal Donohoe, and the Minister for Public Expenditure and Reform, Jack Chambers, presented the first Budget of the coalition Government on Tuesday October 7.<\/p>\n
The Budget 2026 measures announced are aimed at investing in the future, supporting the delivery of housing, and securing Ireland\u2019s competitiveness and economic resilience.<\/p>\n
An overview of the key measures announced are set out below.<\/p>\n
Household tax measures<\/p>\n
There are two changes to the Universal Social Charge (\u201cUSC\u201d ):<\/p>\n
An increase in the entry threshold to the second-rate band from \u20ac27,382 to \u20ac28,700 in line with the \u20ac0.65 per hour increase in the minimum wage (rising to \u20ac14.15 per hour ).<\/p>\n
An extension in the USC concession that applies to those who have a full medical card and earn less than \u20ac60,000 per year for a further two years until the end of 2027.<\/p>\n
The Rent Tax Credit of \u20ac1,000 for single persons and \u20ac2,000 for jointly assessed couples has been extended for a further three years until the end of 2028.<\/p>\n
Mortgage Interest Tax Relief has been extended on a tapered basis for two further years.<\/p>\n
The reduced VAT rate of 9% on gas and electricity bills will be extended until 31 December 2030, with a financial resolution introduced on Budget night.<\/p>\n
The tax rate applying to Irish and equivalent offshore funds and foreign life assurance products will be reduced from 41% to 38%.<\/p>\n
Housing<\/p>\n
The VAT rate applied to the construction of new apartments will be reduced from 13.5% to 9%, effective from 8 October 2025 until 31 December 2030.<\/p>\n
A corporation tax exemption is being introduced in respect of rental profits arising from homes that fall within the Cost Rental Scheme.<\/p>\n
An enhanced corporation tax deduction is being introduced for certain costs incurred on the construction of apartment developments, and for the conversion of non-residential buildings into apartments.<\/p>\n
The Living City Initiative has been expanded and extended to the end of 2030 and the scope of buildings within the initiative includes those built before 1975.<\/p>\n
A new Derelict Property Tax has been announced which will replace the Derelict Sites Levy currently charged at a rate of 7% on the site market value.<\/p>\n
The Residential Development Stamp Duty Refund Scheme has been amended to bring it in line with current planning and development practices and has been extended until the end of 2030.<\/p>\n
The Income Tax deduction for small landlords who retrofit their properties has been extended for a further three years to 31 December 2028.<\/p>\n
Business tax incentives<\/p>\n
The VAT rate on food and catering businesses and for hairdressing services will reduce from 13.5% to 9% with effect from 1 July 2026.<\/p>\n
There are several enhancements to the Research and Development (\u201cR&D\u201d ) Tax Credit regime, including:<\/p>\n
An increase in the rate of the credit from 30% to 35%.<\/p>\n
An increase in the first-year payment threshold from \u20ac75,000 to \u20ac87,500.<\/p>\n
The dividend participation exemption rules will be updated and enhanced by expanding the geographic scope to include jurisdictions where non-refundable withholding taxes apply and by providing several technical amendments to improve the operation of the relief.<\/p>\n
The Digital Games Tax Credit has been extended for a further six years and is enhanced to allow for claims in respect of post-release content work.<\/p>\n
The Film Tax Credit has been enhanced to provide a new 40% rate for productions with a minimum of \u20ac1 million of eligible expenditure.<\/p>\n
The lifetime limit on gains to which the Capital Gains Tax Revised Entrepreneur Relief applies has been increased from \u20ac1 million to \u20ac1.5 million for disposals made from 1 January 2026.<\/p>\n
The Key Employee Engagement Programme (\u201cKEEP\u201d ) is extended to 31 December 2028, subject to approval from the European Commission.<\/p>\n
The Special Assignee Relief Programme (\u201cSARP\u201d ) has been extended for a further five years and is amended to increase the minimum qualifying income to \u20ac125,000.<\/p>\n
The Foreign Earnings Deduction (\u201cFED\u201d ) has been extended for a further five years. The level of relief available will increase to \u20ac50,000 and the scheme will extend to include the Philippines and T\u00fcrkiye.<\/p>\n
A new exemption from the 1% Stamp Duty on the acquisition of shares has been introduced. The exemption will apply to shares in Irish-registered companies traded on regulated markets and have a market capitalisation of below \u20ac1 billion.<\/p>\n
Agricultural sector<\/p>\n
The Accelerated Capital Allowances Scheme for slurry storage facilities has been extended for a further four years.<\/p>\n
The Farm Consolidation (Stamp Duty ) relief, Farm Restructuring (Capital Gains Tax ) relief and the Young Trained Farmer (Stamp Duty ) reliefs have been extended to 31 December 2029. The Farm Restructuring relief has also been broadened to cover woodlands and forestry.<\/p>\n
Climate<\/p>\n
There has been an increase in the rate of carbon tax from \u20ac63.50 to \u20ac71 per tonne. The increase will apply to petrol and diesel from 8 October 2025.<\/p>\n
The VRT relief for electric vehicles has been extended for one further year to 31 December 2026.<\/p>\n
In relation to the BIK regime for company cars, the temporary universal relief to the Original Market Value (\u201cOMV\u201d ) will be extended on a tapered basis for further three years.<\/p>\n
The BIK rates for employer-provided cars will be amended to incorporate a new category for vehicles with zero emissions which will be based on the lowest BIK rates.<\/p>\n
The Accelerated Capital Allowances schemes for energy efficient equipment and for gas vehicles and refuelling equipment have been extended for a further five years.<\/p>\n
The exemption of up to \u20ac400 from Income Tax for certain profits arising from the micro-generation of electricity has been extended for a further three years.<\/p>\n
Social welfare and related measures<\/p>\n
There will be an increase of \u20ac10 in Social Protection payments.<\/p>\n
The Working Family Payment income thresholds will increase by \u20ac60 per week for all families.<\/p>\n
The Child Support Payment will increase by \u20ac8 per week for under 12s and \u20ac16 per week for over 12.<\/p>\n
The rate of Domiciliary Care Allowance will be increased by \u20ac20 per month.<\/p>\n
The Carer\u2019s Allowance income disregard will be increased to \u20ac1,000 for a single person and \u20ac2,000 for a couple.<\/p>\n
The Fuel Allowance rate will increase by \u20ac5 to \u20ac38.<\/p>\n
The recipients of long-term social welfare schemes will be paid a Christmas bonus of 100% of the normal weekly payment.<\/p>\n
The back-to-school clothing and footwear payment has been extended to two- and three-year olds.<\/p>\n
There will be a permanent reduction in the student contribution fee of \u20ac500.<\/p>\n
Other<\/p>\n
The excise duty on a packet of 20 cigarettes will be increased by \u20ac0.50, with a pro-rata increase on other tobacco products.<\/p>\n