Tax Credits & Rate Bands

No changes made to rate bands or tax credits in Budget 2026.

Universal Social Charge (USC)

• The entry threshold to the 2% USC rate will increase from €27,382 to €28,700
• The reduced rate of USC for those on Full Medical Cards earning less than €60,000 per year has been extended to the end of 2027.

Minimum Wage

• Increasing by 65c per hour to €14.15, effective from 1st January 2026.

Value-Added Tax (VAT)

• VAT on Hospitality Services is reducing from 13.5% to 9%, from July 2026. This includes food, catering and hairdressing, and excludes hotels.

Vehicle Registration Tax (VRT)

• VRT relief for electric vehicles is being extended to 31st December 2026.

Housing

Rental

• The Rental Tax Credit is being extended to the end of 2028. This is currently €1,000 for  single or separately assessed individuals & €2,000 for jointly assessed couples

Mortgage Interest

• Mortgage Interest Tax Relief is being extended for two years for homeowners with a mortgage balance of between €80,000 and €500,000 on their primary dwelling (as of 31st December 2022)
• Relief will be 20% of the increase in mortgage interest paid in 2022
• A reduced rate will apply in the final year. 

New Derelict Property Tax

• This will replace the Derelict Site Levy
• The minimum rate is likely to be 7% and is due to be legislated for in 2026.

VAT on the Construction of Apartments

• Effective 7th October 2026, a reduced VAT rate of 9% will apply on the construction of apartments up to the end of 2030.

Living City Initiative

• This will be expanded and enhanced as a result of this Budget. Details to be confirmed.

Energy

• 9% VAT rate for Gas & Electricity will be extended to 31st December 2030
• The Income Tax Disregard of €400 for those selling electricity from micro-generation back to the grid will be extended to 31st December 2028
• A €7.50 per tonne increase in Carbon Tax will apply from 7th October 2025, adding 2.5c to each litre of diesel and petrol. This will apply to all other carbon based fuels from 1st May 2026.

Education

• €500 permanent reduction in the contribution fee for college students
• Increase in standard capitation rates per pupil of €50 in primary and special schools and €20 for post-primary.

Social Welfare

• There will be a €10 weekly increase for Social Welfare Payments, including pensions
• Fuel Allowance is up €5 to €38 per week
• Christmas bonuses for Social Welfare recipients will be paid again this year
• Child Support payments will increase by €8 per week for under 12s and by €16 per week for over 12s.

Public Sector Employment

• There will be an additional 1,717 additional Special Needs Assistants (SNAs) & 1,042 extra teaching posts including 860 extra teachers working in Special Education Needs settings
• Funding set for 1,000 additional trainee Gardaí & 200 extra Gardaí civilian staff
• Funding set for net increase of 400 Defence Forces members, plus 50 civilian roles
• Funding set for additional 3,370 healthcare sector jobs.

Excise Duty

• Cigarettes Duty increased by €0.50 per pack of 20 and pro rata increases will be applied for all other tobacco products.

Please note: There may be further changes to the above information following the Finance Bill. Every effort has been made to ensure that the information provided here is accurate and up to date (as of 7th October 2025). The information provided is of a general nature and may not address the specific circumstances of a particular individual. Cornmarket does not accept any liability arising from any errors or omissions.