The Irish government announced the Irish budget 2026 on the 7th of October 2025.
Budget 2026, introduces a range of tax, reliefs, and structural measures with direct implications for businesses. Below is a curated breakdown of what matters most for SMEs, founders, and business owners.
If you have any questions about these changes, please contact your accountant or a trusted advisor. We’re here to help.
VAT & Indirect Tax Changes
- From 1 July 2026, a 9% VAT rate will apply to food & drink services, hairdressing, café/restaurant/takeaway services (excluding alcohol).
- The 9% VAT rate on gas and electricity is extended through 31 December 2030.
- VAT on completed apartments is reduced to 9% (from 8 October 2025) and this rate is maintained until 2030.
- Several development reliefs and stamp duty incentives are extended, supporting property investment and new builds.
Implication: Hospitality and property developers may see margin benefits. However, cost pressures remain (energy, labour). Businesses should model the impact on cash flows and pricing carefully.
R&D, Innovation & Talent Incentives
- The R&D tax credit rate rises from 30% to 35%, and first-year thresholds increase to €87,500.
- The KEEP (Key Employee Engagement Programme) is extended to 31 December 2028.
- The SARP (Special Assignee Relief Programme) is extended to 2030, and the minimum income threshold is increased to €125,000.
Implication: Tech, export, and high growth firms benefit from improved incentives to attract and retain key staff, and make more innovation investment.
“R&D credit up to 35% is good but still too complex for SMEs. Entrepreneur Relief lifetime limit jumps to €1.5m (€3m for couples) – a real win. KEEP and SARP extended, but SARP’s new €125k threshold may exclude mid-tier talent. BIK relief on EVs extended but tapering” – Tom Francis, Head of Accounting at Kinore
Corporation Tax & Capital Allowances
- Enhanced deductions for construction and apartment development costs are introduced.
- Intangible asset balancing allowances are ring-fenced (capped at 80% of trading income).
- Accelerated capital allowances for energy efficient equipment, gas vehicles, and EV infrastructure are extended through 2030.
Implication: Companies investing in property, green tech or energy upgrades can leverage stronger allowances to improve investment returns.
Employment, Benefits & Payroll Impacts
- The minimum wage increases to €14.15/hr from 1 January 2026.
- The 2% USC rate ceiling is raised by €1,318 (to €28,700), helping low-income earners avoid higher USC burdens.
- Employer and employee PRSI rates increase by 0.1% from 1 October 2025 (Class A: employees 4.2%; employers 11.25%).
- Pension auto-enrolment is introduced 1 January 2026: employees aged 23–60 (not in an existing workplace pension) will be automatically enrolled (employee contribution 1.5%, employer matching).
- Benefit-in-Kind (BIK) reliefs: The €10,000 OMV reduction is extended; electric company cars receive a total relief of €45,000 (including €35,000 + €10,000)
- Mortgage interest relief is extended for 2025 and 2026, calculated on the increase in interest above 2022 levels.
Implication: Payroll systems must be updated to reflect these changes. Labour costs will increase; companies must reforecast budgets and consider benefits structuring.
Enterprise Support & Structural Measures
- €1.3 billion is allocated for enterprise and SME support, including the establishment of a Small Business Unit and a Cost of Business Advisory Forum.
- The government will launch Start-up Ireland and a National Enterprise Hub to streamline access to grants and supports.
- Resources are focused on AI adoption across government agencies, increased capital investment in infrastructure, and future-proofing growth.
- €19.1 billion is to be invested in infrastructure this should benefit construction and related sectors.
Implication: Businesses well positioned to align with infrastructure pipelines or enterprise supports may find new opportunities. Early planning is key.
Key Considerations for Business Owners
- Update systems & compliance
Payroll, accounting, and reporting systems must be updated before 2026. - Reforecast budgets
Revisit cost projections: labour, benefits, energy, capital investment. - Plan investments carefully
Use enhanced allowances and incentives strategically, not just reactively. - Leverage external advice
Legislation is still being finalised. Professional advice will be critical to interpret changes for your specific business.
Get in Touch with Kinore
Budget 2026 introduces several measures with significant business implications. Staying ahead will require proactive reviews, strategic decisions, and careful implementation. We’re here to guide you every step of the way:
- Tailored advisory support
- Tax & compliance interpretation
- Forecasting & scenario modelling
Contact us to see how Budget 2026 will impact your business.
