Tax Credits and Incentives:
- No Major Income Tax Cuts: Personal tax reliefs or band increases did not materialize, so effective tax rates will rise with wage inflation.
- USC Adjustments: 2% USC rate band ceiling increased by €1,318 to €28,700, aligned with minimum wage uplift. Medical card holders earning under €60,000 continue to benefit from the reduced USC rate till at least 2027.
- Rent Tax Credit: Rent tax credit for private accommodation extended to 2028. Mortgage interest credit retained, though capped at €1,250 in 2025 and €625 for 2026.
- Income Tax Deductions for Retrofits: Landlords get extensions for income tax deductions for property retrofits, aiding long-term value and sustainability.
- Energy Credit: €400 household energy credits continue.
- Public Transport Fares: Extended reductions help urban and commuter populations seeking work-life balance.
Capital Acquisitions Tax(CAT)
- Rates and Thresholds Unchanged:
The standard CAT rate remains at 33%, and the main thresholds (such as the Group A threshold for children inheriting from parents at €400,000, Group B at €40,000, etc.) are unchanged for Budget 2026.
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Agricultural and Business Reliefs
- No changes to the headline 90% relief rates or qualifying criteria for agricultural or business assets.
Angel investor relief
- Early-stage “angel investment” relief and increased EII limits confirmed in pre-budget statements, with further potential CGT incentives for equity investors in SMEs.
Measures to Support Enterprise/SMEs
- Minimum Wage: Increased by 65c to €14.15/hour from January 2026; this raises wage costs and margin pressures, particularly for SMEs and hospitality.
- No General Income Tax Cuts: Income tax bands and credits are unchanged, meaning effective tax rates will rise as wages grow; more workers will tip into higher rates.
- VAT Reductions: Hospitality, food, catering, and hairdressing benefit from reduced VAT (13.5% to 9%) from July 2026. Gas and electricity bills retain the reduced 9% VAT rate until end-2030, mitigating household/business energy costs.
- R&D and Innovation: Enhanced Research & Development tax credit (increased from 30% to 35%) supports innovation and business competitiveness. Expanded Digital Game Tax Credit widens eligibility for gaming sector.
- Entrepreneur Relief: CGT Entrepreneur Relief lifetime limit increased to €1.5m, with a 10% CGT rate for qualifying disposals.
- Investment Fund Tax: Tax on income from investment funds reduced from 41% to 38%, supporting private wealth building.
Climate:
- Home Energy Upgrades:
€558 million allocated for home and community retrofits, including deep retrofits and expanded Solar PV grants; up to 65,000 homes will benefit. Low-cost “Home Energy Upgrade Loans” (interest rates from 3%) continue.
The Warmer Homes Scheme and ERDF support focus on lower-income households. - VAT Cuts on Energy Bills:
VAT on electricity and gas remains at 9% (down from 13.5%), extended until end of 2030 - Carbon Tax:
Carbon tax increases to €71/tonne in 2026, with all additional revenue ringfenced for SEAI grants, retrofits, fuel allowance, and sustainability projects.