Minister for Finance Paschal Donohoe has said Budget 2026 will "invest in our future" while also securing current jobs, prosperity and stability.
As he began his Budget Day speech in the Dail chamber, he said the first budget of this coalition Government's term would deliver for citizens and "tackle the serious challenges of meeting our housing and investment needs".
Minister Donohoe has said the Irish economy is forecast to grow by 3.3% this year and by 2.3% next year.
Unveiling Budget 2026, he said that a further 63,500 jobs are expected to be added by the end of the year, and inflation is expected to remain at around 2% next year.
He also outlined that the National Development Plan is to commit €275bn in infrastructure over the next 10 years would "boost growth and job creation in the short and medium term", as well as "increase the potential for our country".
"This Budget will secure jobs and stability at a time of global challenge."
The Government is to spend more than the parameters set out by the Summer Economic Statement, while reducing the size of tax measures.
The Summer Economic Statement set parameters for a planned package of €9.4 billion in Budget 2026, including €7.9bn in additional public spending and a €1.5bn envelope for tax measures.
Minister Donohoe said the tax package has been reduced by €150m from those levels to facilitate additional spending in "targeted supports for the most vulnerable".
'Targeted changes' to USC
There will be "targeted changes" to the Universal Social Charge (USC) from 1 January, the Minister for Finance said, alongside an increase to the minimum wage.
The national minimum wage is to increase by 65c per hour to €14.15 per hour.
Minister Donohoe said the 2% rate band for USC will therefore rise by €1,318 to €28,700.
He said this will ensure full-time workers on minimum wage will remain outside the top rates of USC, and give a "modest benefit to all workers".
On the overall Budget, Mr Donohoe said there was "limited" scope for "significant personal tax changes", but said the Government "will stand by" commitments to make progressive changes for income tax over the full term.
The renters' tax credit, which had been due to expire this year, will be extended for a further three years to the end of 2028.
VAT for food and catering businesses, as well as hairdressing services, will be reduced from 13.5% to 9% from 1 July 2026 - at a cost of €232m next year and €681m in a full year.
Mortgage interest tax relief will be extended for a further two years, with a reduced value applying in the final year.
The 9% VAT rate on gas and electricity bills will be extended until the end of 2030.
The research and development tax credit will increase from 30% to 35% while the first-year payment threshold will go up to €87,500.
Minister Donohoe said he was also publishing an "action plan" to "reform Ireland's tax regime for interest".
Focus on housing
Minister Donohoe described housing as being at the "forefront" of his mind while preparing the Budget.
In his speech, he said he has allocated an additional €200m of external funding to support the Home Building Finance Ireland scheme, which provides finance to homebuilders across the country.
Additionally, VAT on the sale of completed apartments will be reduced to 9% from 13.5% from tonight to the end of 2030.
The Residential Zoned Land Tax will be extended until next year, allowing landowners to avail of an exemption if they "seek to have their land rezoned to reflect the genuine economic activity being carried out".
Mr Donohoe also said he is exempting the rental profits arising from homes that fall within the Cost Rental Scheme from corporation tax.
Watch: 'Christmas Bonus' for €1.5m recipients of long-term social welfare schemes to be paid
And introducing an enhanced corporation tax deduction for "certain costs" incurred on the construction of apartment developments, and for the conversion of non-residential buildings into apartments.
Minister Donohoe announced a new Derelict Property Tax to replace the Derelict Sites Levy, stating that dereliction is "a blight on our towns and cities".
He said he does "not intend" for the new tax to be charged at a lower rate than the levy, which is currently set at 7% of the site market value.
He said legislation for this would be brought forward next year.
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A carbon tax increase will be applied to auto fuels from tomorrow and all other fuels on 1 May next year, Minister Donohoe added.
The rate of the tax will go to €71 per tonne of CO2 emitted.
The revenue arising from carbon tax is estimated at €121m next year, and €157m for a full year.
Minister Donohoe also said that excise duty on a pack of 20 cigarettes would increase by 50 cent, with a pro-rata increase on other tobacco products.
Water, energy and transport
Meanwhile, Minister for Public Expenditure Jack Chambers said the Government will provide €275bn until 2035 to fund water, energy and transport infrastructure so more homes can be built.
Transport initiatives are to be given €4.7bn next year, he added.
This includes the rollout of DART+ and Bus Connects Programmes in Dublin and other cities; phase one of the Cork Area Commuter Rail service and the Enterprise fleet replacement project.
A number of greenway and active travel projects are also included in that funding.
As announced previously, he mentioned that €2bn would be allocated to progress the MetroLink project.
The "Christmas Bonus" for €1.5m recipients of long-term social welfare schemes will be paid this year.
Social protection payments
Minister Chambers said that social protection payments will also increase by €10 per week, benefiting 1.5m recipients, including pensioners, people with disabilities, carers, jobseekers and lone payments.
The income disregard for the carer's allowance will increase to €1,000 for a single person and €2,000 for a couple.
The domiciliary care allowance will also go up €20 euros to €380 euros per month.
Minister Chambers announced a "€300m package of supports" for children and families.
Measures include an increase in the child support payment by €8 for children under 12, and €16 for children over 12 - "the largest ever increase in the rate".
The income threshold for the working family payment will also go up by €60, while the back-to-school clothing and footwear payment has been extended to two- and three-year-olds.
Minister Chambers also allocated a total of €11.3bn in funding to the Department of Housing, including almost 2bn euros for social housing schemes.
The weekly fuel allowance rate will go up by €5 and has been extended to those eligible for the working family payment.
Minister Chambers described the €27.4bn the Department of Health will receive in funding as a "record level of investment".
He said it will deliver 220 more hospital beds, at least 280 community beds and 500 more nursing home places.
Watch: Donohoe says 63,500 jobs expected to be added by end of next year
The funding will also provide an additional 1.7 million Home Support Hours, increased staffing for mental health services and "enhanced" community and primary care services.
Over €3.8bn is being allocated to the Department of Children, Disability and Equality next year for disability services, the Minister for Public Expenditure added.
He described Ireland as having "one of the strongest education systems in the world" and said the Department of Education and Youth will receive €13.1bn next year.
Minister Chambers said this will provide for 1,717 additional special needs assistants to bring the number in the system to almost 24,900.
He said there will be an increase of 1,042 teacher posts, which includes 860 additional teachers working in special educational needs settings.
The Department of Justice Budget allocation will allow for the "recruitment of up to 1,000 trainee gardaí" in 2026, Minister Chambers said, along with 200 civilian staff, additional reserves and €19m for extra overtime.
