Budget 2026 details were announced on the 7th of October 2025 by Minister for Finance Paschal Donoghue and Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, Jack Chambers.
Key points are as follows:
• Income Tax 2026
- No increase in the standard rate band.
- No increase in personal tax credits.
• USC 2026
- There will be a small increase in the 2% band from €27,382 to €28,700, with a corresponding reduction in the 3% band.
• Capital Acquisitions Tax
- The Thresholds were not increased and so will remain at their present levels;
Class A €400,000
Class B €40,000
Class C €20,000
• Pensions & Auto Enrolment
- No changes in pension tax relief announced.
- Minister Chambers confirmed that the national auto-enrolment scheme will launch as planned in January 2026, mandating enrolment for employees aged 23–60 earning over €20,000 if not already in an employer pension plan.
- Some changes in Auto Enrolment (AE) Scheme taxation will be introduced in Finance Bill 2025 to be published in mid-October 2025, in particular to address the anomaly of the initial AE legislation which seemed to tax AE death benefit payouts under PAYE. The Bill will also ensure that employer contributions to the AE scheme will be exempt from USC for the employee.
- AE Contributions: Employee and employer start at 1.5% of gross earnings, with a further 0.5% State top-up; these rates will increase over the next decade, reaching a total 14%.
- Opt-outs are only permitted in designated windows after initial enrolment or after contribution increases.
• Savings & investments
- The life assurance exit tax rate, and the rate applying to realised gains on domestic and foreign collective investment funds, will be reduced from 41% to 38%. However, we will have to wait for Finance Bill 2025 to be clear as to when the reduced tax rate will apply from, e.g. from publication of Finance Bill 2025 or from 1st January 2026.
- The Minister also indicated that he will publish a roadmap early next year, setting out his intended approach to simplify and adapt the tax framework to encourage retail investment, taking into account the European Commission’s recommendation on Savings and Investment Accounts.
- The current 1% Stamp Duty rate applied to purchase of shares listed will not apply where the market capitalisation of the company is less than €1bn; this will apply to end of 2030. Again, it is unclear at this stage when this change will apply from. This may encourage more direct investment in shares of Irish registered SMEs and startups listed on regulated markets.
- No change announced in 1% life assurance premium levy.
• Social Welfare benefits
- A €10 pw increase in the maximum rate of State Pension and other Social Welfare benefits were announced for 2026, with proportionate increases for qualified adults and those on reduced rates of payment and increases in the qualified child increases.
- There will be a double Christmas payment, including the State Pension, in early December 2025.
• Property related reliefs
- The Rent Tax Credit for income tax is extended for 3 years to end of 2028. It is a maximum of €1,000 per single individual and €2,000 per jointly assessed couple.
- The Mortgage Interest Tax Relief for income tax is extended to end of 2027, but with a reduced relief applying in 2027. Homeowners with an outstanding mortgage balance between €80,000 and €500,000 as of 31 December 2022 will be eligible for this relief. The current level of relief will be maintained for 2026 of the increase in interest paid in the tax year 2025 over 2022, with a maximum tax credit of €1,250 per property available. A reduced level of relief will be available in 2027 for the increase in interest paid in the tax year 2026 over 2022, with a maximum tax credit of €625 per property applicable.
- The Help to Buy scheme for first time buyers continues to 31 December 2029
• Derelict Property Tax
- It is planned to introduce possibly in 2027 or 2028 a new Derelict Property Tax (DPT) to replace the current Derelict Sites Levy, at a rate no less than 7% of the land market value. The DPT will be collected by the Revenue Commissioners. In the meantime the Derelict Property Tax continues.
Should you have any queries please contact a member of the team.
