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Budget 2026 Highlights

Budget 2026 sets out a number of tax measures focused on small- and medium-sized businesses and their owners. The increase to the lifetime limit to €1.5m for entrepreneur relief and the increase in the tax credit available for expenditure on research and development are welcome developments.

There have been significant changes to encourage the supply of housing. As speculated, the Minister announced the reduction of VAT from 13.5% to 9% on the sale of completed apartments.

A welcome reduction from 41% to 38% for income and gains generated from Irish and offshore funds has been announced and hopefully this will begin a phased reduction to 33%, which is the current rate for gains on other capital assets.

Details of a major change for the roll-out of domestic electronic invoicing for business-to-business transactions will be announced by Revenue tomorrow.

Following a public consultation in relation to the deductibility of interest, a feedback statement will be published in November and an action plan has been published detailing reforms to the taxation and deductibility of interest.

Should you have any taxation or business questions, our experienced team will be happy to share their insights with you.

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Personal Taxation

  • Increase in the 2% USC ceiling by €1,318 to €28,700

  • Rent tax credit extended to 31 December 2028

  • Extension of limited Mortgage Interest Relief

  • Reduction in tax rate of funds and life assurance products from 41% to 38%

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Business Taxation

  • Improvements to the Research & Development tax credit

  • Improvements to CGT entrepreneur relief

  • Expanding scope of exemption for companies who receive foreign dividends

  • Action plan being published to reform tax regime for interest

  • KEEP extended to 31 December 2028

  • SARP extended for further five years

  • FED extended for five years with increased level of relief up to €50,000

  • Extension of BIK relief on electric vehicles

  • Enhanced corporation tax deduction on costs incurred in construction of apartment developments

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Property-related Tax Measures & Other Measures

  • VAT rate reduction to 9% for food & catering and hairdressing services

  • Reduced 9% VAT rate on gas & electricity extended to 2030

  • Excise duty to increase by 50c on a packet of 20 cigarettes with a pro rata increase on other tobacco products

  • VAT on sale of completed apartments reduced to 9%

  • Potential RZLT exemption available for landowners

  • Extension of Living City Initiative

  • New Derelict Property Tax replacing Derelict Sites Levy

  • Stamp duty refund scheme extended with improvements

  • Bank levy extended by one year

  • Extension to farming relief schemes

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