Ireland Unveils Budget 2026 with VAT Cuts and Increased Spending

The Irish government is set to deliver its Budget 2026 this afternoon, focusing on substantial cuts in VAT for key sectors, including hospitality and construction, while prioritizing business growth over direct financial relief for individual voters. This budget marks a significant shift towards capital investment and enterprise, as officials reveal that negotiations have been particularly challenging this year.

Key provisions of the budget include a reduction in the VAT rate for the hospitality sector, effective from July 1, 2026. Additionally, VAT reductions will apply to newly constructed apartments, alongside the continuation of the lower VAT rate for energy and the current rate for the renters tax credit. The government is also extending mortgage interest relief into next year, with plans to phase it out by 2027.

The budget allocates funds for the hiring of up to 1,000 new gardai and the recruitment of 860 special education teachers. Furthermore, 1,700 Special Needs Assistants (SNAs) will be deployed to support students in need. In a move to enhance support for caregivers, the income disregard for the carers allowance will rise to €1,000 per person per week.

In an effort to address educational costs, the budget includes a permanent reduction of €500 in student fees. Social welfare recipients can expect a double Christmas bonus, while core rates will increase by €10 per week. The childcare sector will receive a substantial boost, with an increase of €500 million aimed at creating more childcare spaces, although last-minute discussions to further reduce fees were ongoing as of last night.

As the government finalizes the details of Budget 2026, the focus on business-oriented policies indicates a strategic approach to economic recovery and growth, leaving individual cost-of-living adjustments on the back burner for now. The outcome of this budget will significantly shape the fiscal landscape in Ireland in the coming years.