Overview of Budget 2026: What changed and why it matters
Budget 2026 was delivered amid a climate of cost-of-living pressures and a push to relieve households while funding critical public services. The finance minister confirmed significant social and tax measures, including a €10 weekly increase to core social welfare rates and a series of targeted supports for workers, the unemployed, families, and vulnerable groups. Here’s a clear breakdown of the headline decisions and what they mean for households, workers, and businesses.
Social protection and welfare: bigger supports across the board
The most visible change is a €10 per week rise to all core social welfare rates, alongside a double Christmas bonus payment for about 1.5 million people. In addition, several social supports see targeted uplifts: fuel allowance expands to more families, the carer’s allowance income disregard increases, and the domiciliary care allowance receives a monthly boost. These measures aim to cushion households against rising costs and to extend supports to those most in need.
USC and tax adjustments to accompany the wage rise
The headline wage policy centers on a 65-cent increase to the national minimum wage, bringing it to €14.15 per hour. To ensure higher take-home pay for those earning near the bottom, the Universal Social Charge (USC) ceiling is raised by €1,318 to €28,700, effectively keeping low earners outside the top USC band. Medical card holders retain a reduced USC rate for more of their earnings through an extended concession period.
Tax and VAT: reliefs, thresholds, and targeted cuts
Several notable tax measures are designed to soften energy and living costs. The VAT rate on gas and electricity remains at 9% until 2030, extending relief for energy bills, while a separate VAT cut targets food and catering-related services at 9% from July 1, 2026—potentially easing costs for households and small businesses in the hospitality sector.
A major housing-related VAT change is the reduction of VAT on completed apartments from 13.5% to 9%, effective immediately until end of 2030, intended to stimulate apartment construction and supply. There are also reforms to derelict properties: a new Derelict Property Tax at 7% of market value will replace the old derelict site levy, with a derelict-property register due in 2027 and implementation soon after.
Energy, transport, and climate investment
The Budget confirms a continued push on energy transformation, including a carbon tax increase to €71 per tonne of CO2 from midnight, with extrapolated consumer costs reflected in fuel pricing. A €4.7 billion transport budget funds major projects such as road and rail upgrades, the Adare bypass, and Cork to Ringaskiddy improvements, as well as long-planned rail and metro developments in Dublin. An emphasis on energy efficiency and renewables is supported by substantial funding for infrastructure and digital health records, aligning with climate and resilience goals.
Housing, health, and public services: investing in the backbone
Housing remains a priority, with announcements of a Housing Activation Infrastructure Fund and a focus on delivering thousands of new social homes, retrofit programmes, and starter homes. The Department of Housing notes a multi-year commitment to capital projects and social housing delivery alongside retrofitting of existing homes for vulnerable residents.
In health and social care, an additional €1.5 billion is allocated to health, enabling more frontline staff and expanded services, including mental health, suicide prevention, and child health supports. The social protection package totals near €30 billion, reflecting a broad, cross-cutting approach to public services.
Industry, culture, and tax reliefs to support growth
The budget also includes targeted supports for the film and games industries, with enhanced tax credits for visual effects and a six-year extension for digital games relief. There are measures to encourage business investment, including expanded entrepreneur relief and refined capital gains relief. Cultural and educational initiatives receive significant funding, including permanent basic income for artists and increased support for national cultural institutions.
Reaction and next steps
Political reaction has been mixed as parties debate the balance between immediate relief and long-term fiscal sustainability. Proponents highlight the tangible boosts to living standards, while critics warn about the impact on inflation and housing supply. The government emphasizes that the budget is about resilience and strategic investment in housing, health, and infrastructure for a larger, brighter future.
What to watch next
Key implementation timelines will determine when households see the benefits, including the USC adjustments, VAT changes, derelict-property taxation, and energy relief. Ongoing scrutiny will focus on housing delivery, health capacity expansion, and how regional transport and infrastructure projects unfold over the coming year.
