Budget 2026: Key Changes, Costs & What It Means for You

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Budget 2026: Ireland’s budget for minimum wage, housing and other matters

On Tuesday, October 7, 2025, Finance Minister Paschal Donohoe and Public Expenditure Minister Jack Chambers presented Budget 2026 to the Irish Parliament—Ireland’s national budget that will define the direction of the country’s economy next year.

Faced with pressures from rising living costs, the housing crisis, and the need to maintain fiscal balance, the government promises a “pro-investment” package, but with selective measures. Economists warn that, although the total budget reaches €9.4 billion, much of it will be consumed by existing expenditures.

What’s New in Ireland’s 2026 Budget

Budget 2026 introduces a series of significant changes that will affect the lives of Irish citizens in areas such as taxes, housing, healthcare, and transportation.

It’s important that citizens are aware of these changes and how they may impact their finances and lifestyle in the coming year.

Online Certified Translation Here are the main highlights of Budget 2026:

Income Tax Brackets

Unlike in recent years, the government decided not to adjust income tax brackets in 2026.

This means that, even with an average 5% increase in wages, more workers will be pushed into the 40% tax bracket.

The Irish income tax system is progressive, with two main brackets:

20% (standard rate) on the first €44,000 40% (higher rate) on everything above that amount For single-income and dual-income couples, the threshold may vary.

Minimum wage

The national minimum wage will increase by €0.65 per hour, reaching €14.15 per hour starting in 2026.

The 2% USC tax rate band will increase to €28,700 to ensure that full-time workers earning the minimum wage remain outside the maximum USC rate.

Housing

Housing continues to be the government’s top priority. The coalition intends to encourage new construction by reducing the VAT rate for the sector from 13.5% to 9%.

In addition, incentive programs for first-time homebuyers and lower-rent schemes for new developments should be maintained.

VAT reduction for the hospitality sector

One of the most anticipated measures is the reduction of VAT (value-added tax) from 13.5% to 9% on restaurant, cafe, and bar services, effective July 1, 2026.

The proposal seeks to alleviate a sector still recovering from the effects of the pandemic and increased operating costs.

Electricity and gas

The government will maintain the reduced 9% rate on electricity and natural gas, which was supposed to return to 13.5% this month, until the end of 2030.

No winter energy credit was announced, as in previous years, which could impact the pockets of Irish residents.

Rental credit

The tax credit for renters, currently €1,000 per person or €2,000 for couples, will be maintained until 2028.

This measure eases the burden of rents, which remain high, especially in Dublin and Cork.

Transport

Reduced public transport fares will be maintained next year

Security and Justice

Up to 1,000 new police officers are expected to be hired by 2026, and more funding will be provided for body cameras, victim support, youth rehabilitation and domestic violence programs, as well as extra resources to speed up immigration processing.

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