It’s budget day. On Tuesday afternoon Minister for Finance Paschal Donohoe and Minister for Public Expenditure Jack Chambers will deliver the coalition’s first budget since last year’s general election.
While last year’s budget was marked by pre-election expenditure, with a €2.2 billion cost-of-living package of once-off measures, this year is due to be more restrained.
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Here’s what we know so far:
RM Block
Headline figures
Budget 2026 is expected to contain an overall package of €9.4 billion.
Of this €7.9 billion will be available for spending measures and there is some €1.5 billion for tax cuts.
Taxation
A reduced 9 per cent VAT rate for restaurants is to kick in from July to help support jobs in the hospitality industry.
The measure will be expensive. Even if, as mooted, hotels are excluded from the VAT rate cut, the full-year cost is more than €650 million, a sizeable chunk of the €1.5 billion earmarked for tax measures in the budget.Delaying implementation to later in 2026 reduces the bill, but it is still expected to cost in the region of €240 million next year – about a fifth of the overall tax package.
Context
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Other VAT measures include a reduced 9 per cent rate for new apartments to encourage their development and an extension of the lower VAT rate for household electricity and gas bills. Both of these are expected to get the go-ahead, at costs of €250 million and €254 million respectively.
Mr Donohoe said there would be no changes to personal income tax amid a focus on jobs and investment.
Welfare
Core weekly welfare payments will rise by €10.
The one-off lump sum payments for welfare recipients are unlikely to be repeated. However, do not rule out the Christmas bonus double payment.
There have been proposals for a second-tier child benefit for families in particular need, but Minister for Social Protection Dara Calleary said earlier this month that such a scheme will not be introduced this year. He said the necessary work to bring it about will not be completed in time and indicated it could be ready for next year’s budget.
Child support payments will increase by €8 for children under 12 and €16 for those 12 and over. Back-to-school footwear and clothing allowances will be expanded to two- and three-year-olds, while eligibility for fuel allowance will be extended to those receiving working family payments. Income thresholds for the working family payments will go up by €60. The income disregard for the carers allowance is also expected to increase by €375 for a single person up to €1,000 and €750 for a couple, to €2,000.
Cost of living
The Government has come under fire from the Opposition over the plan to drop the once-off electricity credits that have helped households with energy costs in recent years. Taoiseach Micheál Martin told the Dáil: “There will be supports in the budget for those most in need.” The most likely avenue for this is through the fuel allowance payment. Options include increasing the weekly payment, extending the payment period or expanding eligibility.
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Extending the reduced rate of VAT applied to energy bills in the budget is also designed to help financially squeezed households. The reduced rate is due to expire at the end of October. On budget eve, that measure seemed nailed on.
Childcare and disabilities
Minister for Children Norma Foley was pushing for a package on childcare fees but it was unclear late on Monday if she had been successful. She had been examining measures which would target the most expensive childcare settings – but it remains to be seen if this, or a more broad-based approach, was successfully argued for.
More certain was an anticipated increase in the order of €500 million or the disability budget, while sources said that “thousands” more childcare places will be funded alongside an extension of the “building blocks” fund for construction of creche extensions, and measures on State-led facilities.
Third-level charges
The budget is expected to include a €500 permanent reduction in the fee of €3,000, which is likely to be billed as the first permanent cut in the fee in decades. “Unlike past temporary reductions, this is permanent. Students and their families can now plan ahead with confidence,” a Government source said.
Changes to the income thresholds for student grants are also signed off – with the household income threshold for Susi grants rising to €120,000, potentially benefiting another 20,000 students. Further investment in apprenticeships is also expected.
Housing and rent
The help-to-buy scheme for first-time buyers is set to be continued and the €1,000 renters’ tax credit is expected to be extended at the same level in 2026.
Separately, the Coalition was expected to sign off on more tax measures for building including a reduction in corporation tax on profits from the construction of some apartments.
Alongside the well-flagged cut to VAT on new apartment sales, the Government was last night examining further measures – including an exemption or reduction in corporation tax for those building cost rental properties, which are provided to tenants below market rents.
Mortgage interest tax relief will also be extended for two years, but reduced for the final year. People will be able to claim the existing level of €1,250 for 2025, but €625 for 2026.
Transport
Public-transport fares are set to remain at a reduced level next year including the across-the-board 20 per cent cut previously brought in.
Education
There were tortured negotiations over the education budget, including a row over the accounting treatment of some spending – whether it would be classed as money for new services or maintaining the existing level of services last year. In the end, there will be money for a new DEIS+ scheme targeting the highest levels of disadvantage, and investment in special education. Some 860 additional special education teachers will be allocated, and 1,700 new SNAs will be deployed. There will be a new Education Therapy Service deploying supports directly into special schools, and an increase in school funding for primary and post-primary schools.
Enterprise
It’s expected that the research and development tax credit will be increased, while there was also a push on to open it up further to collaborations between universities and industry.
Justice
There will be funding for up to 1,000 new Gardaí in 2026, as well as money for body cameras, victim support, youth diversion and domestic violence programmes, as well as more spending to speed up immigration processing.
The Arts, Sport and Communication
The Basic Income for Artists scheme is to be put on a permanent footing – it currently is operating on a pilot basis. 2,000 applications will be sought from September last year, with the hope of increasing that incrementally in subsequent years. There will be €10 million for sport, €15 million for An Post and €33 million for the National Broadband Plan.
Health
Another big-spending department that went down to the wire. The final budget for health will be €27.3 billion, an increase of €1.5 billion on 2025. It’s unknown how much of this is needed to maintain existing services, and how much will be spending on new measures.
It is expected that regional equity of access to services, waiting times, productivity measures, public health initiatives and mental health services will benefit from increased spending.
Climate
There will be €558 million for SEAI residential and community energy upgrade schemes, including the solar PV scheme, to support retrofits. This is an €89 million increase on last year. Carbon tax increases will go ahead as planned.
Other tax measures
There will be a range of smaller measures including a reduction in stamp duty on some share transactions and changes in tax on investors in exchange traded funds. The bank levy will be renewed.
