Ireland Budget 2026: Tax Changes for Individuals and Businesses

Budget 2026 was announced on 7 October 2025. While income tax rates and bands were left unchanged, a series of targeted measures took effect from 1 January 2026 — and several more are scheduled for later in the year. If you run a business, rent your home, or employ staff in Ireland, these changes affect your cash flow and compliance planning.

This guide summarises the Budget 2026 tax measures most relevant to sole traders, company directors, landlords, and hospitality businesses — and what to do before the next filing deadline.

Personal tax: USC, rent credit, and mortgage relief

The 2% Universal Social Charge (USC) rate band ceiling increased from €27,382 to €28,700 from 1 January 2026, aligned with the national minimum wage rise to €14.15 per hour. Full-time workers on the minimum wage remain outside the higher USC rates, and employees above that threshold receive a modest reduction in USC.

The Rent Tax Credit — worth €1,000 for a single person and €2,000 for jointly assessed couples — was extended through 2028. Claim it on Form 11 or through myAccount if you pay rent on a qualifying property and meet the conditions.

Mortgage Interest Tax Relief was extended on a tapered basis through 2026. For 2025, relief is calculated on the increase in interest paid over 2022, capped at €1,250 per property at the standard 20% rate. For 2026, relief applies at 50% of the increase over 2022, capped at €625 per property — claimable from 2027.

PRSI and pension auto-enrolment

Employee and self-employed PRSI increased from 4.1% to 4.2%, and employer PRSI from 11.15% to 11.25%, effective 1 October 2025. Factor these into payroll and preliminary tax estimates for 2026.

Ireland's pension auto-enrolment scheme commenced on 1 January 2026. Employers must enrol eligible staff and match contributions at 1.5% alongside a 1.5% employee contribution, rising over time. If you operate an existing occupational pension scheme, review how auto-enrolment interacts with your current arrangements.

VAT changes for hospitality, housing, and energy

From 1 July 2026, the VAT rate on food and catering services — restaurants, cafés, and similar businesses — drops from 13.5% to 9%. Hairdressing services receive the same reduction on the same date. Update your point-of-sale systems and price lists before July, and ensure VAT returns reflect the correct rate for each period.

Completed apartment sales benefit from a reduced 9% VAT rate (from 13.5%) for supplies from 8 October 2025 through 31 December 2030, intended to stimulate housing supply. The 9% VAT rate on domestic gas and electricity was extended to 31 December 2030.

Revenue also announced a phased rollout of domestic electronic invoicing for business-to-business transactions, aligned with the EU VAT in the Digital Age agenda. Watch for Revenue guidance if you issue or receive high volumes of B2B invoices.

Business tax: R&D credit and capital allowances

The Research and Development tax credit increased from 30% to 35%, with the first-year payment threshold rising to €87,500. Qualifying R&D spend in Irish companies is now more valuable — document projects, staff time, and subcontractor costs carefully to support claims.

Capital Gains Tax on certain investment funds reduced from 41% to 38%. For companies, enhanced capital allowances on energy-efficient equipment continue — check Revenue's list of qualifying assets before major purchases.

Motor and environmental taxes

Benefit-in-kind on employer-provided electric vehicles now uses a new A1 zero-emissions category with reduced rates of 6% to 15% depending on business mileage. VRT relief of up to €5,000 for electric vehicles was extended to 31 December 2026.

Carbon tax increased to €71 per tonne of CO₂ for petrol and diesel from 8 October 2025, with the same rate applying to other fuels from 1 May 2026. Budget for higher heating and transport costs if your business relies on fuel-intensive operations.

What to do now

Review your 2026 preliminary tax estimate in light of PRSI and USC changes. Hospitality businesses should prepare VAT rate transitions for July. Landlords and renters should confirm rent credit eligibility before October filing.

FinnAccountings tracks Irish VAT periods, estimates income tax and USC through the year, and flags when Budget changes affect your liability — connect your accounts and stay ahead of Revenue deadlines.