Budget 2026 in effect: what changed and what it means for households
As Budget 2026 measures snapped into effect at midnight, households, businesses, and students are left recalibrating to a new mix of reliefs and costs. The government announced a package of tax changes and targeted supports designed to protect jobs and stimulate sectors like hospitality, while also addressing everyday expenses such as fuel and tobacco. Debates in the Dáil are set to resume today as politicians from opposition benches question the government’s approach to sustaining benefits beyond one-off supports.
VAT reductions and hospitality sector boost
A key measure that took effect is the reduction of the VAT rate on the sale of completed apartments from 13.5% to 9% — a move aimed at stimulating housing supply and easing costs in the property market. Alongside this housing-focused measure, VAT on food and catering, as well as hairdressing services, will drop from 13.5% to 9% starting 1 July 2026. The government says the cost of these changes will be €232 million next year and €681 million in a full year, reflecting a broader agenda to support consumer-facing sectors.
Taoiseach Micheál Martin defended the Budget against criticism that it relies too heavily on one-off measures, arguing that a sustained VAT cut for hospitality would provide a meaningful stimulus for restaurants and cafes, especially in rural areas where seasonal business cycles are a major concern. In his view, the cut represents a “significant fillip” that could boost economic activity at the local level.
Implications for consumers at the pump and in stores
From midnight, motorists faced an increase in the cost of fuel, with around two-and-a-half cents added to each litre of petrol and diesel. The impact on households and transport-intensive businesses is likely to be felt across local economies, particularly where commuter travel and logistics are important. Tobacco products have also risen by 50c, a change that aligns with ongoing fiscal measures to adjust sin taxes while funding public services.
Education funding and SUSI grants: a broader student focus
The Budget package also brings notable changes to student supports. The income threshold for SUSI grants has been increased from €115,000 to €120,000, widening eligibility for a larger cohort of students. For those living away from their study location, payments will rise by between €200 and €430 to help cover accommodation and living costs, benefiting approximately 30,000 students with a pro-rata increase this academic year.
Additionally, the SUSI postgraduate fee contribution grant will rise from €4,000 to €4,500. The government indicates ongoing investment in higher and further education, with more than 1,100 extra healthcare course places planned and dedicated funds for student mental health and campus well-being. Overall, €1 million is allocated for mental health initiatives, and €3 million is earmarked to support students with disabilities, including targeted support across higher and further education institutions.
Job protection and long-term strategy amid global uncertainty
Speaking on RTÉ’s Nine O’Clock News, the Taoiseach emphasised the need to protect jobs in the face of global economic uncertainty. He noted wages were expected to rise by around 5% this year and argued the Budget balances short-term relief with longer-term structural adjustments. The government contends that maintaining a mix of targeted supports and revenue measures is essential to avoid a “boom-and-bust” cycle that could undermine consumer confidence and employment growth.
Q&A and next steps: Leaders’ Questions and further scrutiny
As Budget 2026 details circulate, Leaders’ Questions provide a platform for opposition parties to probe the government’s rationale and to press for clarity on how measures will be delivered and funded. Finance Minister Paschal Donohoe and Enterprise Minister Jack Chambers will answer listener questions on RTÉ’s Today with Claire Byrne, outlining priorities and taking public input into account as the fiscal year unfolds.
What to watch as the Budget unfolds
Key questions ahead include how the VAT cuts will translate into real costs for households, whether the hospitality boost will sustain employment across rural regions, and how the SUSI changes will influence access to higher education. Observers will be looking for early indicators of whether the Budget’s mix of reliefs and reforms can deliver on the government’s stated aim of protecting jobs while maintaining prudent financial management in an uncertain global environment.
