Budget 2026: what changed for 2026

Budget 2026 left tax bands and credits unchanged and widened the 2% USC band to €28,700. It extended the rent credit and cut VAT on apartments and catering.

Budget 2026 was announced on 7 October 2025, and its tax measures became law in Finance Act 2025. These are the changes in force for the 2026 tax year. For what happens in 2027, see Budget 2027.

Income tax, USC and PRSI

• no change to income tax rates, bands or the main credits
• the 2% USC band rose from €27,382 to €28,700, so a full-time worker on the new €14.15 minimum wage stays out of the 3% band
• the rent tax credit, up to €1,000 a person, was extended to the end of 2028
• the mortgage interest tax credit was extended to 2025 and, at a reduced rate, 2026
• employee PRSI continued to rise under the existing schedule: 4.1% to 4.2% in October 2025, then 4.35% in October 2026

The USC saving was smaller than the PRSI increase, so take-home pay on a steady salary fell slightly.

VAT

• new apartments: 9% instead of 13.5% from 8 October 2025 to the end of 2030
• food and catering, and hairdressing: 9% from 1 July 2026
• 9% on electricity and gas extended to the end of 2030

Business and property

• R&D tax credit up from 30% to 35%, first-year payment threshold €87,500
• Entrepreneur Relief lifetime limit raised from €1 million to €1.5 million from 1 January 2026
• residential development stamp duty refund and the Living City Initiative extended to 2030; retrofitting relief for landlords extended by three years
• Farm Restructuring, Young Trained Farmer and Farm Consolidation reliefs extended to the end of 2029
• carbon tax on petrol and diesel up to €71 a tonne from 8 October 2025, and on other fuels from 1 May 2026
• a new Derelict Property Tax announced, to start no earlier than 2027

Welfare and wages

• most weekly social welfare payments up €10 from January 2026
• Child Support Payment up to €58 (under 12) and €78 (12 and over); Fuel Allowance up €5 to €38
• Working Family Payment income limits up €60 a week
• national minimum wage up to €14.15 an hour from 1 January 2026

Sources: Citizens Information and Revenue's Budget 2026 summary.

Work it out

• Budget 2027: what changes for you →
• Take-home pay →
• Rent Tax Credit →

Sources

• Revenue: Standard rates and thresholds of USC (checked 25/10/2026)
• Revenue: Tax rates, bands and reliefs (checked 25/10/2026)
• Revenue: Historical VAT rates (23%, 13.5%, 9%, 4.8%) (checked 25/10/2026)
• Revenue: Second reduced rate of VAT: qualifying apartments at 9% from 8 October 2025 (Budget 2026) (checked 25/10/2026)
• Revenue: Rent Tax Credit: how much can you claim? (checked 25/10/2026)

General information, not tax advice. HeyPenny is not a tax agent.