Budget 2026 Highlights: Key Increases and Initiatives

Ireland’s upcoming Budget 2026 is shaping up to include significant increases in social welfare, support for education, and initiatives aimed at stimulating economic growth. Here’s a comprehensive overview of what we can expect.

Key Social Welfare Enhancements

State Pension and Social Protection Increase

One of the most anticipated changes is a €10 hike in the State pension and various Social Protection rates. This move aims to ease the financial burden on many citizens, particularly the elderly and vulnerable groups.

Carer’s Allowance Adjustments

In response to concerns raised by Independents in Government, the income disregard for the Carer’s Allowance will see an increase. For single individuals, it will rise by €375 to €1,000, while couples will benefit from a boost of €750, bringing the allowance to €2,000.

Mortgage Interest Relief Extension

For homeowners, the extension of mortgage interest relief, benefiting over 60,000 households, is set to continue for another year before a gradual phase-out begins in 2027.

Education Sector Investments

Additional Teaching and Support Staff

Minister for Education, Helen McEntee, is expected to announce funding for 860 additional special education teachers alongside 1,700 new special needs assistants. This investment underscores the government’s commitment to enhancing educational support for children with additional needs.

Basic Income for the Arts

The Basic Income for the Arts scheme currently supports 2,000 artists with a weekly payment of €325 and is set to become a permanent initiative. Applications for this scheme will open in early 2026, with the new version commencing in September 2026.

Economic Growth Initiatives

Funding Increases in Various Sectors

The Budget proposes increased funding, including:

• €10 million for sports
• €15 million for An Post
• €33 million for the national broadband initiative

Support for Businesses

Businesses can look forward to an increase in the Research and Development tax credit to spur innovation and growth. Additionally, Tourism Ireland is expected to receive extra funding to market new direct flights and explore reopening international offices.

VAT Rate Adjustments

A planned VAT cut for new-build apartments from 13.5% to 9% aims to stimulate the construction of stalled projects. This could potentially affect up to 40,000 apartments with existing planning permissions. The hospitality sector will also benefit from a reduced VAT rate from July 2026, which may lead to an estimated €232 million cost to the State.

Renters and Minimum Wage Adjustments

Renters’ Tax Credit Stability

Despite previous commitments for progressive increases in the Coalition’s Programme for Government, the tax credit for renters is expected to remain unchanged at €1,000 for individuals and €2,000 for couples. This decision is projected to have a State cost of around €350 million.

Minimum Wage Increase

Starting January 1, the minimum wage is set to rise from €13.50 to €14.15 for workers aged over 20, following the recommendation of the Low Pay Commission. This adjustment is expected to trigger modifications to the Universal Social Charge to prevent higher taxation for minimum wage earners.

Additional Notable Changes

Digital Game Tax Credit Revisions

Anticipating feedback from the gaming industry, changes to the Digital Game Tax Credit will be introduced. The aim is to broaden eligibility, addressing concerns about its current structure that restricts claims to complete game development.

Public Sector Wage Demands

Fórsa, the largest public sector trade union, has voiced concerns that the absence of significant income tax measures in the Budget may lead to increased wage demands from unions. General Secretary Kevin Callinan emphasized the need for higher wage increases if living costs continue to rise without corresponding tax relief.

Conclusion

As the government finalizes details of the €9.4 billion Budget, the proposed changes aim to improve social welfare, enhance education, and stimulate economic growth. With a mix of new funding initiatives and tax adjustments, Budget 2026 promises to address various challenges faced by citizens while promoting a healthier economy.