What Budget 2026 means for you
If you’re wondering how this year’s Budget affects your household finances, we explain what’s changed and what it means for you and your family.
This year’s Budget 2026 includes a planned package of €9.4bn including €8.1bn in additional public spending and €1.3bn ringfenced for tax measures.
The one-off financial supports of previous years has been removed, and more permanent schemes are targeted at the most vulnerable.
Here’s a summary and explanation of the Government’s main announcements.
Energy costs
Even though energy prices have stabilised, households continue to face financial pressure from high gas and electricity costs. The extension of the VAT cut is helpful, but the end of electricity credits this year removes a key support that had eased the burden for many.
What’s changed?
The Government has announced a raft of measures to help with high energy bills.
What it means for you
- The increase in weekly Fuel Allowance will mean an extra €140 to cover bills during the annual fuel allowance season.
- There will be no one-off credit for electricity bills this year, but the reduced 9% VAT rate on bills will remain in place until 2030.
- If you qualify for Working Family Payment you will now be able to claim the Fuel Allowance, which will be worth €38.00 per week.
- The €7.50 Carbon Tax rise will mean around €17.00 will be added to household gas bills annually. This increase will affect coal, gas, home heating oil, and briquette prices from 1 May 2026.
- Homes that export their excess renewable energy back to the grid will continue to benefit from a €400 income disregard for a further 3 years.
Housing costs
Although mortgage rates in Ireland have been falling in 2025, Ireland still has relatively high housing costs compared to other European countries. Despite the downward trend, renters are still bearing the brunt of rising rates between 2022 and 2024, so the Government has extended measures to help with housing costs.
What’s changed?
What it means for you
- If you’re a homeowner with a mortgage between €80,000 and €500,000 you’ll qualify for 20% tax relief on the extra interest paid on your mortgage between 2022 and 2024. You’ll need to apply for the relief through Revenue’s Online Service.
- If you’re renting your property and are a PAYE taxpayer, the tax credit reduces your tax by €1,000. You can claim the tax credit for rent payments made in previous years by applying to Revenue. Make sure you claim it individually if you live with others or are part of a couple to double the relief.
- If you’re buying your first home in the next few years, the government have pledged that more affordable, social housing should be built in the areas that really need it.
Transport costs
Transport initiatives are to receive €4.7 billion next year, with a focus on public transport. The MetroLink project will also be allocated €2bn, as previously announced.
What’s changed?
What it means for you
- The Carbon Tax rise means that petrol and diesel prices will go up from 8 October 2025. Expect to pay an extra €1.28 for petrol and €1.48 for diesel when you fill a 60-litre tank.
- The 20% fare discount which means you’ll save €2 on every €10 fare has been continued for now, potentially saving commuters hundreds of euros.
- The extra funding for various transport schemes should provide better, more efficient public transport services across cities and towns.
Work, Taxes and Pensions
With most Irish residents paying some form of tax, the announcements on USC, tax credit increases and income tax cuts will affect almost everyone.
What’s changed?
VAT
VAT rate for food and catering businesses and hairdressing services reduced from 13.5% to 9% from 1 July next year, but no change for hotels, bars and pubs.
Pensions
The introduction of the Auto-Enrolment Retirement Savings Scheme, known as My Future Fund, is scheduled to start on 1 January 2026.
From January, contributions from employees, employers and the State will be collected through payroll. In 2026, employee contributions will be 1.5% of gross salary, employer contributions will be 1.5%, and the State will top it up by 0.5%.
What it means for you
- The minimum wage boost would result in an extra €24.38 per week if you work 37.5 hours weekly. This works out around €106 per month or €1,268 per year (before tax).
- Because the 2% USC band is expanded, people who were near the old threshold might now pay the lower 2% rate over a slightly larger portion of their income. That will soften the tax burden if your wages increase.
- Thanks to the USC concession extension, those with a medical card and under the income limit will continue to benefit from a lower USC rate.
- If you are in salaried employment, you will be auto-enrolled into a workplace pension. Your contribution will be 1.5% of your gross salary; your employer’s contribution will be 1.5%, and the State will top it up by 0.5%.
Education & Childcare
In good news for students, a €500 permanent reduction in student fees has been announced, and an additional 20,000 students will be eligible for student grants due to the increase in the household income threshold for SUSI to €120,000. Parents will also benefit from additional funding for childcare and special education.
What’s changed?
What it means for you
- You’ll pay around €500 less in fees if you’re headed to college or Uni this year. The student contribution fee has been reduced permanently from €3,000 to €2,500, while more students will be able to access support due to the rising parental income limits.
- Due to the income threshold for Susi grants, more students will qualify for the €500 support grant.
- Parents may be able to claw back more to cover childcare costs in 2026, and approximately 35,000 more children will benefit from increased funding for the National Childcare Scheme (NCS).
- If your child has additional needs in school, more support and funding will be available. It’s proposed that 860 extra special education teachers will work across various Special Educational Needs (SEN) settings, plus 1,717 additional special needs assistants (SNAs) will work across primary, post-primary, and special schools from September 2026.
Benefits
This year, the Department of Social Protection is providing a €10 rise in weekly social welfare payments, such as the state pension, Carer’s Allowance, disability payments, and Jobseeker’s Allowance. However, many one-off payments from previous years have been withdrawn.
What’s changed?
State pension
The State Pension is paid to people from the age of 66 who have paid enough PRSI. From January 2026, it will be €299.30 per week.
From 1 January, pensioners will see an increase of €10 per week and be able to claim their pension anytime between the ages of 66 and 70.
All PRSI rates will increase by 0.1% on 1 October 2026.
What it means for you
Low-income working families are set to benefit the most from this year’s budget. If you receive social welfare, a pension or disability allowance, you’ll get an extra €10 per week in your pocket. There will be no one-off supports this year.
- If you receive welfare payments, the €10 increase could mean an extra €43 per month, which is €520 per year.
- The income disregard for the Carer’s Allowance and income limit for Carer’s Benefit is to increase, meaning extra financial support if you are caring for a loved one or have had to give up recent employment to do so.
- Families also get a boost to help with rising living costs. If you receive the working family payment, you’ll now qualify for the Fuel Allowance from March, and more families may qualify due to the income threshold rising.
- If you’re aged over 66 and receiving your pension, you’ll get €10 extra per week and your pension will rise to €299.30.
You can find out more about qualifying benefits and new payment rates from the Department of Social Protection.
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