Budget 2026

Budget 2026 was an altogether restrained affair. Whilst income tax was barely touched, meaning no change in take-home pay generally, there were a few business-specific measures that you may need to be aware of:

 

Revised Entrepreneur Relief

There has been a very welcome change to Revised Entrepreneur Relief. The lifetime gains limit has been increased from €1m to €1.5m.

If you are thinking about selling your business, entrepreneurs relief can be a really useful tool to consider. Assuming you meet the conditions, it can reduce your Capital Gains Tax (CGT) from 33% to 10%.

By way of an example, John is a small business owner who has been running a trading company for several years. He decides to sell his business assets in 2026. The total gain from the sale of his qualifying business assets is say €1.2m.

Under Revised Entrepreneur Relief, under the old limit, the first €1m of qualifying gains was taxed at a reduced CGT rate of 10%.

Any gains above the €1m lifetime limit are taxed at the standard CGT rate of 33%. Total CGT Payable for John would be €100k (on the first €1m) + €66k (on the remaining €200k) = €166k.

With the proposed changes here today (increasing the lifetime limit to €1.5m) the full €1.2m would be taxable at 10% giving John a CGT liability of €120k.

 

VAT

Framed as an attempt to save jobs in the sector, the VAT rate for food and catering businesses and for hairdressing services will be reduced from 13.5% to 9% from July 2026.

The 9% VAT on gas and electricity bills is being extended until 31 December 2030.

Effective tonight, until 31 December 2030, the VAT rate with respect to the sale of completed apartments will be reduced from 13.5% to 9%.

 

Employers

 

Minimum Wage

Effective, 01 January 2026, the National Minimum Wage is going up €0.65 to €14.15 per hour.

 

USC

To support full time workers on the minimum wage with a view to ensuring that they remain outside the top rate of USC, there will be an increase in the 2% USC ceiling. The 2% band for USC will rise by €1,318 to €28,700.

This increase will result in a modest benefit to all employees on income above that amount.

 

Key Employee Engagement Programme (KEEP)

KEEP was due to expire at the end of 2025 but this has been extended out until the end of 2028.

 

Special Assignee Relief Programme (SARP)

SARP, the scheme to assist foreign executives coming to Ireland to work, has been extended for five years but there has been an increase in the minimum salary for eligibility to €125,000.

The Minister also noted his intention to simplify the administrative requirements of the scheme.

 

Property 

 

Landlords - Retrofitting  

As a landlord, you can deduct certain expenses incurred on retrofitting a premises in calculating your rental profits. Budget 2026 extended this deduction for another three years. 
The deduction you can claim is the lesser of €10,000 or the amount incurred on the retrofitting works. 

 

Rental Tax Credit  

The rent tax credit has not been increased but it is being extended for three years, until the end of December 2028. 

 

Mortgage Interest Tax Credit   

The mortgage interest credit is being extended for two years, and the minister noted that a “reduced value” will be provided for in the final year.

 

Housing 

 

Dereliction  

The Minister announced a new Derelict Property Tax (to be administered by Revenue). This new tax will replace the Derelict Sites Levy, which is currently charged at a rate of 7% on the site market value (intention is that new tax will not be lower than this rate).  

 

Living City Initiative  

The Minister announced the following substantial changes to the scheme: 

• Extension to the end of 2030 
• Increasing scope for residential properties from those built before 1915 to those built before 1975 
• Amending the scheme to support the use of “over the shop” premises for residential purposes 
• Max amount of relief available will be increased from €200,000 to €300,000 with greater flexibility on the time period over which the relief can be claimed 
• Intention to add more areas to include Athlone, Drogheda, Dundalk, Letterkenny and Sligo.  

 

Electric Vehicles - BIK 

The universal relief on the Original Market Value of a vehicle which was first introduced as a temporary measure in 2023 is to be extended albeit on a tapered basis. 

The relief here will remain at €10,000 for 2026 and it will be tapered as follows: 

Year	€
2027	5,000
2028	2,500
2029	nil

 

The Minister also announced the introduction of a new vehicle category for zero emission cars only, where the lowest BIK rates will apply. 

The Accelerated Capital Allowances scheme is to be extended for energy efficient equipment for a further five years until the 31 December 2030.   

 

Further and higher education 

The Minister has confirmed a “permanent” €500 cut to third-level student fees. 

From 01 January, the annual student contribution fee will fall from €3,000 to €2,500, applying to the current academic year for all eligible students. 

In addition to the fees reduction, thousands of extra students are set to qualify for SUSI student grants, following a decision to raise the household income threshold to €120,000.

 

Innovation   

 

R&D 

The R&D tax credit % will increase from 30% to 35%. The threshold for first-year refunds under the R&D tax credit scheme will increase to €87,500 to support smaller projects. 

The Minister also noted that he will also publish a “research and development compass” in the coming weeks, “which will consider targeted changes to the R&D tax credit to better align with industry practices, for example in the areas of outsourcing and qualifying expenditure definitions”. 

 

Digital Games Tax Credit 

The digital games tax credit is to be extended for six years to the end of 2031.

 

Film Tax Credit 

An enhancement has been announced to this relief providing for a 40% rate of relief for productions with a minimum of €1 million of eligible expenditure (cap of €10m per production). 

 

Agriculture 

Farm Consolidation (Stamp Duty) relief, Farm Restructuring (CGT) relief and the Young Trained Farmer (Stamp Duty) have all been extended out to the end of the year 2029.  

The scope of Farm Restructuring Relief has been extended to include woodlands and forestry. 

There has also been an extension of the Accelerated Capital Allowance scheme for slurry storage facilities for four more years.

 

Offshore funds and foreign life assurance  

In a welcome step, the Minister announced that he will be reducing the tax rate applicable to Irish and equivalent offshore funds and foreign life assurance products from 41% to 38%.  

This is a positive step in the direction of addressing the well documented view that consumers investing in funds have to date been disincentivised.   

 

Updated 7 Oct 2025 | Published 7 Oct 2025

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This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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