Budget 2026 Summary

Tax Highlights

• The national minimum wage will increase by €0.65 per hour to €14.15 per hour, effective from 1 January 2026.
• The ceiling for the 2% USC band will increase by €1,318 to €28,700, to reflect the minimum wage increase.
• The USC concession to those holding a full medical card and earning less than €60,000 per year allowing them to avail of the reduced rate of USC has been extended by a further 2 years.

• The Research and Development (“R&D”) Tax Credit rate has been increased from 30% to 35%, and the first-year payment threshold has been increased from €75,000 to €87,500, to support smaller R&D projects.
• An R&D compass will be published in the coming weeks, which will consider targeted changes to the R&D Tax Credit to better align with industry practices, for example in the areas of outsourcing and qualifying expenditure definitions. It will also set a pathway for the development of innovation supports.
• Last year, a participation exemption for foreign dividends was introduced to simplify double tax relief and enhance Ireland’s competitiveness for multi-national businesses. The geographic scope of the exemption has been expanded to include jurisdictions where non-refundable withholding taxes apply, whilst several technical amendments are expected to improve the operation of the relief. These are expected to be included in the Finance Bill.
• An action plan will be released today to reform Ireland’s tax regime in respect of interest. The action plan is informed by responses received to an extensive consultation on the tax treatment of interest in Ireland. The primary request arising from that consultation is for the fundamental reform of the underlying framework for the taxation and deductibility of interest. The plan will progress reforms to achieve a simplified regime that supports competitiveness and protects the Irish tax base.

• A reduced VAT rate of 9%, down from 13.5%, will apply to the sale of completed apartments from 8 October 2025 until 31 December 2030.
• The Rent Tax Credit of €1,000 for a single taxpayer or €2,000 for a jointly assessed couple has been extended for a further 3 years to the end of 2028.
• The Mortgage Interest Tax Relief has been extended for a further two years with a reduced value applying in the final year.
• The Residential Zoned Land Tax (“RZLT”), introduced in Budget 2022, came into effect on 1 February 2025. There was an announcement of another opportunity for landowners to avail of an exemption from RZLT in 2026 if they seek to have their land rezoned to reflect the genuine economic activity being carried out.
• The exemption will be considered by Local Authorities based on guidelines issued by the Minister for Housing, Local Government and Heritage. Further changes to enhance the operation of the tax are set to be brought forward in the Finance Bill.
• An exemption from corporation tax for the rental profits arising from homes that fall within the Cost Rental Scheme has been announced. This exemption will apply to developments that are designated as falling within the Cost Rental Scheme by the Minister for Housing, Local Government and Heritage from 8 October 2025.
• There was an announcement of the introduction of an enhanced corporation tax deduction for certain costs incurred on the construction of apartment developments, and for the conversion of non-residential buildings into apartments. It will be available for projects where a Commencement Notice is submitted on or after 8 October 2025, and on or before 31 December 2030.
• There were a number of changes to the Living City Initiative announced; 

• The initiative is being extended to the end of 2030;
• There is an increase in the scope of the initiative for residential properties from those built before 1915 to those built before 1975;
• There are amendments to the scheme to support the use of “over the shop” premises for residential purposes, where the works are carried out by enterprises, the maximum amount of relief available will be increased from €200,000 to €300,000;
• Greater flexibility on the time period over which the relief can be claimed has been announced, further detail of which is expected in the Finance Bill; and
• There was an announcement of plans to add the five regional centres under the National Planning Framework to the initiative. These are Athlone, Drogheda, Dundalk, Letterkenny and Sligo.
• The announcement of a new Derelict Property Tax, which will be implemented and collected by the Irish Revenue Commissioners. With the agreement of the Minister for Housing, Local Government and Heritage, this new tax will replace the Derelict Sites Levy, which is currently charged at a rate of 7% on the site market value. There has been an indication from the Ministers in Budget 2026 that there is no intention for the Derelict Property Tax to be charged at a lower rate than the Derelict Sites Levy.
• Legislation providing for the Derelict Property Tax is due to be introduced in 2026. Preliminary registers of dereliction will be published in 2027 and the tax will be implemented as soon as possible after this date.
• There has been an extension of the Income Tax deduction available for small landlords who retrofit their properties, for a further three years.
• Several tax relief schemes that are specific to the agriculture sector, which were due to end this year, have been extended. These are the Farm Consolidation (Stamp Duty) relief, Farm Restructuring (CGT) relief and the Young Trained Farmer (Stamp Duty) relief, and they have been extended to the end of 2029. The scope of the Farm Restructuring Relief has also been expanded to include woodlands and forestry. The Accelerated Capital Allowance scheme for slurry storage facilities has also been extended for four more years.

• This year’s carbon tax increase will bring the tax per tonne of CO2 emitted to €71 and will apply to auto fuels with effect from 8 October 2025, and all other fuels from 1 May 2026.
• The €5,000 Vehicle Registration Tax relief for electric vehicles has been extended for a further year until 31 December 2026.
• The regime in relation to Benefit-in-Kind (“BIK”) for company cars is to be extended on a tapered basis. The relief will remain at €10,000 in 2026 and reduce to €5,000 in 2027 and €2,500 in 2028 before being abolished in 2029.
• The Ministers introduced a new vehicle category for zero emission cars only and the lowest BIK rates will apply to these.
• The Accelerated Capital Allowances schemes for energy efficient equipment and for gas vehicles and refuelling equipment has been extended for 5 years, ending on 31 December 2030.
• The Income Tax disregard of €400 for income received from selling electricity back to the grid from micro-generation activities is extended for a further 3 years, ending 31 December 2028.
• €5.3 billion is being provided to the ESB and EirGrid to accelerate the transition to renewable energy.
• €1.1 billion has been allocated to the Department of Climate, Energy and the Environment in 2026 which includes:
• €558 million in carbon tax revenue for residential and community energy upgrade schemes;
• Continued investment in the retrofit of public buildings to support the delivery of the National Retrofit Plan; and
• €209 million for the climate action and environmental leadership programme to support Ireland’s climate objectives and enhance biodiversity.

• The 9% VAT rate on electricity and gas supplies has been extended until 31 December 2030.
• A reduced 9% VAT rate, down from 13.5%, will apply to food and catering businesses, and hairdressers from 1 July 2026.
• The Irish Revenue Commissioners will be commencing a phased roll out of domestic electronic invoicing arrangements for business-to-business transactions in line with recent EU VAT law changes, with further guidance to be announced. 

• The existing Capital Gains Tax Revised Entrepreneur Relief is to be enhanced with an increase on the lifetime limit on gains to which the relief applies. This change will see the limit increase from €1 million to €1.5 million for gains on disposals made from 1 January 2026. This change will help ensure the Capital Gains Tax system supports entrepreneurs looking to grow their businesses.
• The tax rate that applies to Irish and equivalent offshore funds, and foreign life assurance products, has been reduced from 41% to 38%.
• Reflecting the complexity of the tax framework for retail investment, and to facilitate due consideration of the Funds Sector 2030 Report, a roadmap will be published in 2026, setting out an intended approach to simplify and adapt the tax framework to encourage retail investment.
• An implementation plan for the overall Funds Sector 2030 Report is also being published today.
• To support capital markets, a new market cap exemption Stamp Duty threshold of €1 billion for Irish SMEs and start-ups trading on regulated markets has been introduced. For companies below this threshold, the 1% Stamp Duty charge paid on share transactions will not apply.

• The Special Assignee Relief Programme (SARP) has been extended for 5 years and the minimum qualifying income threshold has been increased to €125,000. Further details will be set out in the Finance Bill.
• The Key Employee Engagement Programme has been extended until the end of 2028, subject to approval from the European Commission.

• The Film Tax Credit is to be amended to provide a 40% rate of relief for productions with a minimum of €1 million of eligible relevant visual effects expenditure. The new rate will apply up to a maximum of €10 million per production.
• The Digital Games Tax Credit has been extended for 6 years to end on 31 December 2031. The credit is to be amended to allow for claims in respect of post release content work where the original game qualified. Further details will be provided as part of the Finance Bill.
• Increase in excise duty on a pack of 20 cigarettes of 50 cents, with a pro-rata increase on other tobacco products.