Budget 2026 Summary
Key Takeaways from Budget 2026 for Small and Medium-Sized Businesses
Budget 2026 marks a strategic shift in government priorities. Announced on Tuesday, 7 October 2025, this budget takes a distinctly different approach from previous years, focusing on long-term investment rather than immediate personal tax relief.
Finance Minister Paschal Donohoe has delivered a budget that increases overall government spending by €9.4 billion, with clear emphasis on building for the future. This is being positioned as the largest capital investment programme in the history of the State, signaling the government's commitment to infrastructure development and sustainable economic growth.
Rather than the broad-based personal tax cuts seen in previous budgets, Budget 2026 concentrates on major infrastructure investment, targeted support for housing and construction, enhanced research and development incentives, sector-specific business supports, increased social welfare payments, and strategic investment in education and healthcare.
This budget reflects a measured approach to fiscal policy, balancing immediate cost-of-living supports with the critical infrastructure and innovation investments needed to secure Ireland's economic competitiveness for the years ahead.
Personal Finance & Income
Minimum Wage increases by 65 cent per hour to €14.15 from 1 January 2026.
USC Changes: The 2% rate ceiling increases to €28,700, ensuring minimum wage workers remain outside the top USC rate.
Rent Tax Credit extended to 2028 at €1,000 per person (€2,000 for couples).
Mortgage Interest Relief extended for two more years (2025 and 2026) with reduced value in 2026.
Housing Measures
VAT Rate Reduction: The rate on completed apartments reduces from 13.5% to 9%, effective immediately until 31 December 2030.
Cost Rental Scheme: Rental income from these properties is now exempt from corporation tax.
Derelict Property Tax: A new tax will replace the existing Derelict Site Levy from 2027. The rate will be at least 7% of the property's market value, collected by Revenue.
Business & Innovation
R&D Tax Credit increases from 30% to 35%, supporting Ireland's competitive position in pharmaceuticals, life sciences, technology and gaming.
VAT Reduction: 9% rate for food, catering and hairdressing services from 1 July 2026.
KEEP Programme extended to end of 2028, helping smaller businesses incentivize key employees.
Entrepreneur Relief: Lifetime limit increases from €1 million to €1.5 million for qualifying disposals from 1 January 2026.
Talent & Employment
SARP Extension: Special Assignee Relief Programme extended for five years with minimum income threshold increasing to €125,000 from 2026.
Foreign Earnings Deduction increases to €50,000, extended five years, and expanded to include Philippines and Turkey.
Company Car BIK: €10,000 relief extended to 2026, then reduces to €5,000 (2027), €2,500 (2028), ending in 2029. A new zero-emission vehicle category with the lowest BIK rates will apply from 2026.
Energy & Environment
Carbon Tax increases from €63.50 to €71 per tonne for petrol and diesel (effective 8 October 2025). The increase will apply to all other fuels from 1 May 2026.
EV Support: €5,000 VRT relief extended to 31 December 2026.
Energy VAT: 9% reduced rate on electricity and gas extended to end of 2030.
For complete details on all Budget 2026 measures, please see the attached full budget document.
Please note: Many measures require legislation before coming into effect. Implementation dates vary throughout 2025 and 2026.
For more information visit: www.gov.ie/budget2026
If you would like further information or advice on the impact of Budget 2026 on your business please get in touch.