Ireland Unveils Budget 2026 with Focus on Housing and Business Incentives

Budget 2026 Announced Amidst Economic Uncertainty

Ireland's Budget 2026 was formally presented to Dáil Éireann on October 7, 2025, by Minister for Finance Paschal Donohoe and Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation Jack Chambers. The government outlined a total package valued at €9.4 billion, comprising €8.1 billion in public spending and €1.3 billion in taxation measures. This budget marks a strategic shift towards 'pro-investment' policies and targeted supports, moving away from the broad cost-of-living giveaways seen in previous years. The fiscal plan projects a surplus of €10.3 billion for the current year and €5.1 billion for 2026.

Targeted Tax Relief for Households

The budget introduces several measures aimed at providing tax relief and support to households:

• The ceiling for the 2% Universal Social Charge (USC) band will be raised by €1,318 to €28,700, effective from January 1, 2026.
• The Rent Tax Credit has been extended for an additional three years, until the end of 2028, maintaining its current value of €1,000 for individuals or €2,000 for couples.
• Mortgage Interest Tax Relief will be extended for two more years, covering 2025 and 2026, with a reduced maximum value of €625 in 2026.
• The 9% VAT rate on gas and electricity bills is extended until December 31, 2030.
• A reduction in the VAT rate for food, catering, and hairdressing services from 13.5% to 9% will take effect from July 1, 2026.
• The National Minimum Wage is set to increase by 65 cents to €14.15 per hour from January 1, 2026.
• Core social welfare rates will see a €10 weekly increase.
• A permanent €500 reduction in Student Contribution fees for Irish and EU undergraduate students will be implemented from the 2026/27 academic year.

Significant Measures to Address Housing Challenges

Housing remains a central focus, with several initiatives introduced to boost supply and affordability:

• The VAT rate on the sale of new apartments will be reduced from 13.5% to 9%, effective from October 8, 2025, until December 31, 2030.
• A new Derelict Property Tax will replace the existing Derelict Sites Levy, to be administered by Revenue, with a rate of at least 7% of the site's value.
• The Residential Development Stamp Duty Refund Scheme is extended until December 31, 2030.
• A corporate tax exemption will be introduced for rental profits derived from designated Cost Rental Scheme units.
• Enhanced corporation tax deductions are planned for qualifying apartment construction costs and the conversion of non-residential buildings into apartments.
• The Living City Initiative is extended to December 31, 2030, covering properties built before 1975 and expanding to include additional regional towns.
• The Help-to-Buy Scheme has been extended for five years.
• A €2 billion capital investment is allocated for housing, water infrastructure, and energy systems, alongside €200 million in additional funding for Home Building Finance Ireland.

Changes to Business Tax Incentives

The budget also includes adjustments to business tax incentives to foster growth and investment:

• The lifetime limit for Capital Gains Tax (CGT) Revised Entrepreneur Relief will increase from €1 million to €1.5 million for disposals made from January 1, 2026.
• The Research and Development (R&D) Tax Credit rate is increased from 30% to 35%, with the first-year payment minimum threshold rising from €75,000 to €87,500.
• The Key Employee Engagement Programme (KEEP) is extended until the end of 2028.
• The Special Assignee Relief Programme (SARP) is extended for five years, with the minimum income threshold increasing to €125,000 from 2026.
• The tax rate on funds and life assurance products will be reduced from 41% to 38%.
• Carbon tax on petrol and diesel increased to €71 per tonne from October 8, 2025, with this increase applying to other fuels from May 1, 2026.
• Excise duty on a pack of 20 cigarettes will increase by 50 cents from October 8, 2025.