The Daily Star Ireland
The Government’s upcoming Budget announcement will include a range of measures targeting homeowners, workers, and businesses — with mortgage interest relief extended for another year and several tax adjustments on the way. The €9.4 billion package, set to be finalized today, will also focus on supporting the arts, promoting tourism, and reviving stalled housing projects.
Mortgage Interest Relief and Housing Measures
More than 60,000 households will benefit from an extension of the mortgage interest relief scheme through next year. The measure, however, will gradually be phased out by 2027.
In housing, a VAT reduction for new-build apartments is expected to be announced in an effort to stimulate construction on stalled developments. The VAT rate is likely to drop from 13.5% to 9%, potentially affecting up to 40,000 apartments that already have planning approval. The measure could take effect shortly after Budget 2026, with an estimated cost of €250 million to the State.
Tax Changes for Renters and Workers
The renters’ tax credit — currently valued at €1,000 for individuals and €2,000 for jointly assessed couples — will be extended at the same rate, despite previous government commitments to gradually increase it. Maintaining the current rate is expected to cost around €350 million, as the number of renters continues to grow.
The minimum wage will also rise from January 1, following recommendations by the Low Pay Commission. Workers aged over 20 will see the rate increase by 65 cents to €14.15 per hour. Adjustments to the Universal Social Charge (USC) and employers’ PRSI are also expected to prevent low-income earners from being pushed into higher tax brackets.
In addition, a carbon tax hike will be introduced as part of the Government’s ongoing environmental commitments.
Boosts for Business, Tourism, and the Arts
Businesses are expected to benefit from an increase in the Research and Development (R&D) tax credit, designed to stimulate innovation and support new investment.
Tourism Ireland will receive extra funding to market new international flight routes to Ireland and to explore reopening overseas offices that were previously closed. Fáilte Ireland, which has recently moved under the Department of Enterprise, will expand its remit to include support for food-related businesses.
In the cultural sector, the Basic Income for the Arts scheme will be made permanent. The current pilot supports 2,000 artists with a weekly income of €325, but the permanent program — launching in September 2026 — will open to a broader range of artistic disciplines. Applications for the new version of the scheme will begin early next year.
Education, Energy, and Welfare Provisions
The Government is expected to permanently reduce college fees by €500, though opposition parties argue this still leaves fees higher than their current level after temporary cost-of-living reductions.
Energy supports will shift focus this year — with no new electricity credits planned — but the fuel allowance eligibility is set to expand. The 9% VAT rate for gas and electricity will continue, costing the State around €254 million.
A major social protection package is still being finalized. Increases of at least €8 per week are expected for welfare recipients, while larger hikes are being considered for targeted groups, including families receiving child support. The income disregard threshold for carer’s allowance is also likely to rise, as part of a long-term goal to abolish the means test entirely.
Changes to the Video Game Tax Credit
The Digital Game Tax Credit, introduced in 2022, is set for reform following low uptake by studios. Industry body Imirt has lobbied for more flexibility, arguing that current rules — which only allow relief for fully completed games — limit participation. The updated scheme is expected to allow claims for partial game development and post-launch updates, broadening its impact on Ireland’s growing €250 million gaming sector.
Wage Pressure and Union Response
Public sector union Fórsa has warned that the absence of new income tax cuts will likely fuel stronger wage demands in upcoming negotiations. General Secretary Kevin Callinan said that without tax band adjustments or cost-of-living measures such as energy credits, unions would need to pursue higher pay increases to protect workers’ living standards.
“If tax bands and allowances aren’t indexed and cost-of-living supports are removed, higher wage increases will be the only way to maintain real incomes,” Callinan said, adding that this would heavily influence public sector pay talks when the current agreement expires in June 2025.
Finalizing the €9.4 Billion Budget Package
Key ministers — including Taoiseach Micheál Martin, Tánaiste Simon Harris, Finance Minister Paschal Donohoe, Public Expenditure Minister Jack Chambers, and Minister Sean Canney — will meet today to finalize the €9.4 billion package.
While details are still being agreed upon, tomorrow’s Budget is set to prioritize housing, low-income supports, and sustainable growth, with targeted measures to protect households from inflation and maintain Ireland’s competitive edge in a shifting global economy.
