“A SENSIBLE budget that will safeguard our future” is how Minister for Finance Pascal Donohoe described Budget 2026 this Tuesday (October 7), with the government focusing on housing, job security, and future investment for Ireland in years to come.
The budget consisted of €9.4billion as set out in the Summer Economic Statement, with €8.1bn being allocated to public spending and €1.3bn in taxation measures.
In his opening remarks, the Minister said the economy was “remarkably resilient” with 2.8 million people in employment today, and predicting an additional 63,500 jobs by the end of next year.
The rate of inflation is expected to come in at around two per cent this year, with the domestic economy projected to grow by 3.3 per cent, and 2.3 per cent in 2026.
A tax package of €125m has also been established to facilitate additional spending in targeted supports for some of the most vulnerable groups in society.
Housing
The government has committed to €5bn in capital investment for housing delivery next year.
The VAT rate on the sale of completed apartments was reduced from 13.5 per cent to nine per cent in an effort to reduce the viability gap in apartment construction.
The Rent Tax Credit, which was due to expire this year, was extended for a further three years, while the Mortgage Interest Tax Relief has also been extended for two years.
The Minister announced a Derelict Property Tax to replace the existing Derelict Sites Levy to tackle rising numbers of dereliction – the tax will not be lower than the current seven per cent levy.
Budget 2026 will allocate €11.3bn to the Department of Housing, Local Government, and Heritage, according to the Minister for Public Expenditure and Reform.
Minister Jack Chambers said €2.9bn will go towards the delivery of new-build social homes and the acquisition of second-hand housing.
Almost €2bn will be directed towards social support programmes including the Housing Assistance Payment, Rental Accommodation and Social Housing Current Expenditure Schemes.
Budget 2026 will allocate €1.2bn towards the government’s starter homes programme, which includes the Help to Buy initiative.
Minimum wage
From January 1 2026, the national minimum wage will increase by 65c per hour, a total of 14.15 per hour for workers.
The ceiling for the USC two per cent rate band will increase by €1,318 to €28,700, and the concession that applies to individuals with a full medical card who earn less than €60,000 per year has been extended for a further two years until the end of 2027.
Energy
There are no targeted energy credits featured in previous budgets for homeowners this year. The nine per cent VAT rate on gas and electricity has been extended until the end of 2030.
A tax of €71 per tonne of CO2 emitted will be applied to auto fuels, effective from Wednesday (October 8).
The government will provide €1.4bn to Uisce Éireann in 2026 to support new housing developments and to improve the country’s water supply.
In his budget speech, Minister Chambers announced €3.5bn to the ESB and EirGrid to strengthen energy security and accelerate the country’s transition to renewable energy.
VAT Rate
As expected, the government is reducing the VAT rate for food and catering businesses, as well as hairdressers from 13.5 per cent down to nine per cent. The measure will come into effect from July 1 2026.
Education and Childcare
Early years funding will rise by €125m to 1.5bn next year.
35,000 extra children will benefit from the National Childcare Scheme to 285,000.
More than 105,000 children are expected to avail of the universal Early Childhood Care and Education (ECCE) scheme, which is hoped to create 2,300 extra childcare places.
There will be an additional 1,717 SNAs employed in schools in 2026 and a further 1,042 teaching posts including 860 additional teachers working across various Special Educational Needs settings.
The Department of Further and Higher Education have announced a permanent reduction of 500 in student contribution fees.
Additional funding will support DEIS Plus and a new Deis Plan.
The standard capitation rates paid to all schools will also increase. This will be an additional €50 for primary and special schools and an extra €20 for post-primary schools.
The provision of 1,110 new places in key health and social care professions to meet growing demand in the sector.
Health
The overall health budget next year will cost over €27.4bn, an increase of €1.5bn.
An additional 220 to 265 extra acute hospital beds and at least 280 community beds will be provided as part of Budget 2026, along with an extra 500 nursing home support places, and an extra 1.7 million home support hours.
An additional 1.7 million home support hours, 500 more nursing home places, increased staff and expansion of mental health services are also included.
A pack of 20 cigarettes will now cost an extra 50c, and excise duty on other tobacco products will be raised on a pro-rate basis.
Social welfare
Minister for Public Expenditure Jack Chambers also announced a double Christmas bonus social welfare payment, as well as an increase of 10 per week for a person receiving a weekly social protection payment.
The Carer’s Allowance income disregard has also been increased to 1,000 for a single person, 2,000 for a couple, as well as an increase in the rate of Domiciliary Care Allowance by €20 per month, to a monthly total of €380.
Transport
A total of €4.7bn will be allocated to the Department of Transport as part of Budget 2026.
This funding will go towards the rollout of the Bus Connects programme, which Limerick is currently part of, as well as funding going towards a number of road projects including the Adare bypass.
Justice
Funding announced to recruit 1,000 trainee Gardaí in 2026, as well as an additional 200 civilian Gardaí and a €19m increase in the Garda overtime budget.
