The government has unveiled Budget 2026, featuring a €10 increase to all core social welfare rates, a minimum wage hike to €14.15, and significant VAT changes for businesses.
Finance Minister Paschal Donohoe and Public Expenditure Minister Jack Chambers announced the measures, which include a double Christmas bonus payment for social welfare recipients and a 65-cent increase to the minimum wage.
The 2% USC rate band will rise by €1,318 to €28,700, providing tax relief for workers. Third-level students will benefit from a €500 reduction in the student contribution fee.
From July 1, 2026, the VAT rate for food and catering businesses and hairdressing services will be cut from 13.5% to 9%. The VAT rate for completed apartments will also drop from 13.5% to 9%.
A new derelict property tax will replace the existing derelict site levy, charged at 7% of the property’s market value. The €5,000 VRT relief for electric vehicles has been extended until the end of 2026.
The carbon tax increase will apply to auto fuels from midnight, while the price of a box of 20 cigarettes will increase by 50 cents from midnight. However, the Irish Heart Foundation criticized the cigarette price increase as insufficient, noting Irish prices remain lower than in the UK and calling for tougher tobacco taxes to address the 12 daily deaths caused by smoking.
A €4.7 billion transport budget will fund major infrastructure projects including the M28 Cork to Ringaskiddy road and the Adare bypass. A major redevelopment project at the Crawford Art Gallery in Cork will also receive funding.
The budget aims to balance cost-of-living support with investments in infrastructure, climate action and public services as Ireland continues to manage high living costs and economic challenges.