Budget 2026 has been unveiled, marking a shift from short-term cost-of-living supports toward longer-term, structural measures designed to build a fairer and more resilient economy. This year’s €9.4 billion package focuses on steady increases to welfare and pensions, moderate tax adjustments to protect middle-income earners, and targeted incentives for businesses and innovation.
The Government has described this as a “responsible” budget, one that balances ongoing support for households with fiscal discipline as global growth slows. There are no one-off energy credits or emergency payments this time, but instead, permanent improvements in income supports, tax thresholds, and sectoral incentives.
In this article, we break down the main announcements from Budget 2026 and what they mean for individuals, families, and businesses across Ireland.
One of the most headline-grabbing announcements is the increase in the National Minimum Wage from €13.50 to €14.15 per hour, effective 1 January 2026. This 65-cent rise reflects the Low Pay Commission’s recommendation and continues the Government’s multi-year effort to move closer to a “living wage.”
To prevent this increase from pushing minimum-wage workers into higher Universal Social Charge (USC) liabilities, the 2 % USC band has been extended to €28,700. This means those earning the new minimum wage full-time will remain in the lower USC bracket and avoid a stealth tax increase.
At the same time, the Government announced a €10 weekly rise in all core social welfare and pension payments, benefiting more than 1.5 million people. These include the State Pension, Jobseeker’s Allowance, Carer’s Allowance and Disability Allowance.
What it means:
For workers on low or modest wages, these combined changes ensure that the minimum-wage uplift is not eroded by higher tax deductions. Pensioners and welfare recipients see steady, structural gains instead of short-term bonuses.
What it means:
Families with school-age children gain meaningful recurring relief rather than sporadic lump-sum supports. Expanding eligibility for the Working Family Payment and Fuel Allowance should help offset energy and childcare costs through the winter months.
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What it means:
While renters and mortgage holders see some continued relief, the Government’s emphasis has shifted toward supply-side measures, using tax incentives to make building and renovating homes more attractive. The new derelict property tax signals stronger policy action to bring idle properties back into use.
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There are no sweeping income-tax cuts for 2026. Instead, the Government prioritised smaller, targeted changes designed to maintain fairness and prevent bracket creep:
A key feature of Budget 2026 is the reduction in the tax rate on investment returns, a move welcomed by savers and long-term investors. The tax on investment funds and life assurance savings products, commonly known as the exit tax, will fall from 41% to 38% from January 2026.
This marks the first reduction in over a decade and is designed to encourage personal saving and make domestic investment products more attractive compared to direct shareholdings, which are taxed under Capital Gains Tax rules.
The Government stated that this change reflects its goal of supporting financial resilience and rewarding long-term saving among households, while also aligning Ireland more closely with European norms for investment taxation.
What it means:
Together with the higher Entrepreneur Relief threshold and improved R&D tax credits, this change signals a clear pro-investment stance from the Government, intended to promote savings, innovation, and long-term capital formation.
What it means:
The overall tax direction is neutral, the Government’s focus is on preventing tax drag and supporting job-rich sectors, not cutting rates wholesale. Businesses in hospitality, energy and R&D stand to benefit most from targeted VAT and credit adjustments.
What it means:
These moves demonstrate Ireland’s ongoing commitment to innovation-led growth. SMEs benefit from greater liquidity through higher R&D refunds, while start-ups and scaling founders gain improved exit flexibility. Multinationals are also reassured by the continuation of SARP, reinforcing Ireland’s status as a competitive base for global talent.
The Department of Health budget increases to €27.3 billion, supporting new frontline staff recruitment, expanded disability services, and improvements in community and mental health care. Funding also targets waiting-list reduction and emergency-department capacity.
Education continues to receive strong prioritisation, with measures including:
What it means:
Investments in these core areas represent the Government’s strategy of long-term resilience building, more teachers, more hospital capacity, and more affordability for students rather than short-term financial relief.
In parallel with social and fiscal measures, the Budget reinforced Ireland’s climate commitments:
What it means:
Sustainability and regional development continue to underpin fiscal planning. Businesses in the green economy and construction sectors will find opportunities in energy efficiency and public works projects, while regional communities gain from infrastructure investment.
Budget 2026 will likely be remembered less for dramatic giveaways and more for measured, structural reforms that seek to balance social fairness with economic prudence. The focus on permanent welfare increases, childcare supports, sectoral VAT relief, and innovation incentives signals a government moving toward steady, predictable policymaking after several years of crisis-driven budgets.
For most households, it brings small but reliable improvements to disposable income. For businesses, especially in hospitality and technology, it offers practical tools to stabilise costs and invest for growth. For the broader economy, it reinforces a message of stability, prudent spending paired with targeted incentives.
At Fairstone, we can help you translate these announcements into practical steps: from adjusting payroll systems and business forecasts to personal tax planning and investment strategy. Contact us today to understand how Budget 2026’s measures can work for your goals, and to plan confidently for the year ahead.
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What is the Help to Buy Scheme (HTB)?: The Ultimate Guide to the First-Time Buyer Scheme in Ireland
Information as of 07/10/2025
Disclaimer:
This article does not constitute tax or legal advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. This article is for general information purposes and is not an invitation to deal or address your specific requirements. The information disclosed should not be relied upon in their entirety. Although endeavours have been made to provide accurate and timely information of the various source material, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.
