Budget 2026, announced on 7 October, provides a €9.4bn package of spending and tax measures, with approximately 85% allocated to public expenditure.
While significant in scale, the Budget does not provide any significant tax changes. For many in the workforce and the wider public, the measures may feel limited in scope and impact.
There are essentially two tax policy measures, both well flagged, being the VAT cut to 9% for the food hospitality sector as a blunt measure to support businesses and consumers, which will only take effect from July next year. The second is a VAT rate cut to support the construction of new apartments.
While the government may have acknowledged calls – including from the Irish Fiscal Advisory Council – to rein in public spending, those warnings appear to have gone largely unheeded.
Although the Minister signalled some prudence in not indexing income tax thresholds and tax credits to inflation and a conservative approach to other tax changes, this is not a Budget of restraint.
At €9.4bn, the Budget 2026 package is substantial relative to the size of the economy
Despite the large spending package, the government appears to be taking a calculated gamble by leaning heavily on volatile corporate tax receipts – revenues that may not be sustainable in the longer term.
The continuing commitment to long term public infrastructure projects and increased funding across water, housing, grid, transport and other key infrastructure is important. Such investment is essential not only for national resilience but also for sustaining the competitiveness of the FDI sector and the broader economy.
Notwithstanding the small increase to the lifetime limit at which Revised CGT Entrepreneur applied from €1m to €1.5m, which continues to compare poorly with the equivalent regime in the UK, and bolstering the R&D regime in increasing the credit from 30% to 35%, there is no meaningful measures to boost entrepreneurship and job creation by privately owned businesses.
Domestic businesses need more support from this government rather than signalling plans for potential change, which was a common theme across the Finance Ministers speech. This need has never been more acute following recent volatility driven by external factors which has utterly exposed our dependency on tax receipts from FDI businesses.
While stronger supports for entrepreneurs and domestic Irish businesses could help reduce this dependency, Budget 2026 regrettably represents a missed opportunity in this regard.
Explore RSM Ireland's Budget 2026 insights below.
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