Budget 2026: private client tax

Irelands Minister for Finance has confirmed that unlike recent Budgets, there will be no expansion of the standard income tax rate (20%) band in 2026. Irish taxpayers had become accustomed to increases in net take home pay annually as a result of increases in the standard income tax rate (20%) band, before which the higher 40% rate applies. 

With little or no changes in income tax bands, rates and credits, current take home pay will need to cover any increases from inflationary costs. 

Budget 2026 includes an increase of 65 cent per hour in the minimum wage, which will increase to €14.15 per hour from 1 January next. This increase represents a real cost for many domestic businesses. 

The Universal Social Charge’s (USC’s) 2% rate band will increase by €1,318 to €28,700 to take full time workers on the minimum wage out of the higher USC rates. 

Those on full medical cards with annual income less than €60,000 will continue to benefit from a concession from USC for two more years. 

Whilst no increase in the standard rate tax band will be seen in 2026, the Minister confirmed the continuation of certain tax credits and reliefs for income tax purposes which included 
Rent tax credit – currently €1,000 per annum, extended for three years to end of 2028,  

Mortgage interest relief – extended for two years to end of 2027. 

The Minister also restated the intention to make progressive changes to Irelands income tax regime during the lifetime of this Government where the economy remains strong. 

Despite much lobbying for a reduction in the headline rate, the Government have decided to retain Irelands capital gains tax rate at 33%

An unexpected change in entrepreneurs relief was announced moving the lifetime gains threshold from €1m to €1.5m to which a lower 10% CGT rate applies is welcome news for business owners who plan to dispose of an interest in a qualifying business. This change will apply to gains arising from 1 January 2026. 

Budget 2026 included a reduction in the 41% tax rate to 38% that applies to Irish and equivalent offshore funds and foreign life assurances policies. Given the complexity surrounding the current Irish tax regime for retail investment the Ministers expressed his intention to publish a roadmap in early 2026 on an approach to simplify and adapt the tax framework to encourage greater retail investment in Ireland. 

Whilst Budget 2026 was relatively benign in regard to income tax changes, a number of new or enhanced property related incentives designed to address the housing crisis, and boost critically needed accommodation supply. 

Property related tax measures include: 

1. A reduced VAT rate of 9% (previously 13.5) on supply of completed apartments effectively from Budget night to 31 December 2030

2. The introduction of a new Derelict Property Tax to replace the current Derelict Site Levy, the rate for which will be at least 7% - legislation to be introduced in 2026. 

3. An exemption in 2026 from residential zoned land tax for those seeking rezoning for genuine economic activity in 2026, subject to adjudication by Local Authorities.

4. Enhanced corporation tax deduction for certain costs incurred on construction of apartments and conversion of non-residential buildings into apartments.

5. Exemption from corporation tax of rental profits from homes falling within the Cost Rental Scheme.

6. Extension of the Living City Initiative to 2030, increasing its scope from houses built before 1915 to those built before 1975, increasing the upper limit of the relief from €200,000 to €300,000 and adding five new regional centres under the National Planning Framework to the scheme. 

7. Extension of the property retrofitting income tax deduction for small landlords for a further three years.