Jack Chambers, Minister for Finance and Paschal Donohoe, Minister for Public Expenditure & Reform, delivered their Budget speeches in the Dáil at 1pm on Tuesday, 7 October 2025.
The Coalition announced a pre-election budget with spending increases and tax cuts worth more than €9.4 billion, which will consist of a core expenditure package of just under €8.1 billion, €2 billion of which for capital expenditure and a tax package of over €1.3 billion.
This brings the total package for Budget 2026 to €9.4 billion. With inflation for 2025 at 2%, growth for the same year is 3.3% while 2026 growth will decrease to 2.3% but it seems the squeezed middle will remain squeezed.
John Lowe of MoneyDoctors.ie shares his breakdown of Budget 2026.
Highlights at a glance
- Protecting jobs is one of the main objectives.
- Welfare rises and tax changes, but no one-off cost-of-living measures.
- €10 across-the-board increase to core weekly welfare payments, including the state pension - now €299.30 per week.
- 2% rate band for Universal Social Charge to rise by €1,318 to €28,700.
- VAT reduced to 9% from 13.5% for buyers of new apartments, plus VAT reduction to 9% for food businesses, catering and hairdressing. The VAT rate of 9% is also maintained for utilities til 2028.
- Minimum wage increased by 65 cents to €14.15 per hour.
- The price of a 20-pack of cigarettes and other tobacco-based products will go up by 50 cents from midnight, 7 October.
- Rent tax credit extended to 2028 and mortgage tax relief extended til 2027.
Income & other taxes
Income tax
- Standard rates of tax are unchanged.
Pay Related Social Insurance (PRSI)
- ALL PRSI rates remain the same.
Minimum wage levels
- Minimum wage rises by 65 cents to €14.15 per hour.
Universal Social Charge
- 2% rate band rises by €1,318 to €28,700.
Corporation Tax
- Unchanged – still 12.5% for the majority of companies.
- Corporation tax cut on apartment builds.
Capital Gains Tax
- Remains the same at 33%.
Capital Acquisition Tax (inheritance tax) & Deposit Interest Retention Tax
- Remains the same at 33%.
Transport
- Reduced public transport fares will be maintained for next year.
- €5,000 Vehicle Registration Tax relief for EVs extended to the end of 2026.
- BIK regime for company cars extended on a tapered basis – worth €10,000 next year, €5,000 in 2027, and €2,500 in 2028. It will be abolished in 2029.
- A carbon tax increase will be applied to auto fuels from midnight and all other fuels on 1 May next year.
- The rate of the tax will go to €71 per tonne of CO2 emitted - an increase from €63.50 to €71 per tonne of carbon dioxide emitted. This will add around 2 cents a litre to petrol.
- The revenue arising from the carbon tax is estimated at €121 million next year, and €157 million for a full year.
Social welfare benefits
- All Social Welfare benefits increased by €10 per week. This will bring the weekly jobseekers allowance rate to €254 a week, state pension to €299.30 per week.
- There will be a double Christmas bonus payment paid to 1.5 million people.
- The fuel allowance will be rolled out to 50,000 families in receipt of the working family payment. The income thresholds for the working family payment will increase by €60 per week. The fuel allowance rate will increase by €5 to €38 per week.
- The carer's allowance income disregard will increase to €1,000 for a single person and €2,000 for a couple.
- The domiciliary care allowance will increase by €20 a month to €380.
- The child support payment will increase by €8 per child for children under 12 and €16 for children over €12. It brings the payments to €58 and €78, repressively.
- The hot school meals programme will continue to be rolled out to the remaining primary schools, costing €330 million to feed 440,000 children.
Healthcare
- The final allocation for health will be €27.3 billion, an increase of €1.5 billion on 2025.
- 300 more staff for mental health services.
- 100 more clinicians for mental health crisis, including specialist teams to be placed in model 4 emergency departments out of hours.
- New crisis resolution teams, including drop-in crisis cafés to be established next year.
Housing, the homeless and other social housing benefits
- The Help to Buy Scheme is to be extended to 2030.
- Renter's tax credit has been extended for three years at its current level of €1,000 for an individual or €2,000 for a couple.
- VAT on the sale of new apartments to be reduced from 13.5 per cent to 9 per cent.
- Exemptions or reductions in corporation tax on profits from the sale of some apartments, including Cost Rental schemes.
- Mortgage interest tax relief has been extended for two years, but reduced for the final year. People will be able to claim the existing level of €1,250 for 2025 and €625 for 2026.
- €588 million for SEAI residential and community energy upgrade schemes – an €89 million increase on last year.
Small and medium sized businesses
- New market cap exemption Stamp Duty threshold of €1 billion for Irish small and medium-sized businesses and start-ups on regulated markets.
- VAT (Value Added Tax) reduction to 9% for food businesses, catering and hairdressing, but does not take effect til July 2026.
- The VAT rate of 9% is also maintained for all utilities til 2028.
Indirect taxes, excise and other duties
- Excise duty goes up by 50 cents on a box of cigarettes, with pro rata increases on other tobacco products.
Education
- 108,000 third-level students will receive a €500 reduction in the Student Contribution Fee - this will be on a permanent basis of €2,500 per annum.
- 20,000 additional students will become eligible for the SUSI grant (The Student Grant Scheme), with the income threshold moving from €115,000 to €120,000.
- There will be 1,100 new college places created across health and social care professions. This will include 25 medical places and 86 nursing posts at Ulster University and Queen's University Belfast.
The arts, sports and education
- Basic Income for Artists scheme to be retained on a permanent basis, rather than as a pilot scheme.
- The Section 481 film tax credit will see a new 40 per cent rate of relief for productions with €1 million of spending on relevant visual effects work, up to a maximum of €10 million per production.
- The Digital Games tax credit will be extended for six years until the end of 2031.
For farmers, farming and the agri-food sector
Farm succession, funding for TB eradication and support for the tillage sector are amongst the farming measures announced in the Budget.
In his speech, Minister for Finance Paschal Donohoe said he would extend the Farm Consolidation (Stamp Duty) relief, Farm Restructuring (CGT) relief and the Young Trained Farmer (Stamp Duty) relief to the end of 2029.
Also announced was the extension of the Accelerated Capital Allowance scheme for slurry storage facilities for an additional four years. Minister Donohue highlighted that these measures constitute State Aid and must comply with EU State Aid rules.
Minister of Agriculture, Martin Heydon, said Budget 2026 provides for a 9% increase in funding when compared to 2025. The newly announced TB Action Plan will receive €85 million in additional funding, more than doubling the allocation for Bovine TB eradication. This results in a total budget of €157 million for TB.
The views expressed here are those of the author and do not represent or reflect the views of RTÉ.
For more information, click on John Lowe's profile above or on his website.
