Budget 2026: What you need to know

Budget 2026, announced 7th October 2025, has been framed by the Government as a “pro-investment” package, marking a deliberate shift away from broad-based tax giveaways and energy credits toward more targeted supports aimed at strengthening Ireland’s long-term economic resilience. Minister for Finance Paschal Donohoe emphasised the importance of maintaining fiscal discipline, announcing a projected surplus of €10.3 billion this year and €5.1 billion next year.

While Ireland’s economy remains remarkably resilient, the high cost of living continues to weigh on households. Against this backdrop, the €9.4 billion budget package aims to prioritise capital investment and bolster economic resilience, with a slightly reduced tax package of €1.3 billion leaving €8.1 billion for increased infrastructure and housing expenditure. As anticipated, there were no changes to personal tax rates, with the Minister noting that indexation alone would have consumed the bulk of the tax envelope.

Our experts on Budget 2026:

Economy and business supports

Kevin Timoney, Chief Economist at Davy, said:

“Today’s Budget delivers a strong signal of support for Ireland’s business community, particularly in areas that drive innovation, employment, and long-term growth. The enhancement of the Research and Development Tax Credit to 35% and the increase in the first-year payment threshold will be especially welcomed by SMEs and scale-ups investing in future technologies. These changes reflect a clear understanding of the role R&D plays in maintaining Ireland’s competitiveness.” 

“The extension or expansion of reliefs for entrepreneurs, key employees and foreign assignees, including the Revised Entrepreneur Relief and the Special Assignee Relief Programme, will help sustain Ireland’s attractiveness as a hub for talent and investment. Measures to support the visual effects and digital games sectors also show a welcome responsiveness to the evolving needs of creative industries.” 

Unlocking retail investment

James Costello, Head of Davy's Portfolio Management Group, said:

"We welcome the Government’s commitment in Budget 2026 to publish a roadmap early next year aimed at simplifying Ireland’s tax framework to support investment, particularly in line with the EU’s Savings and Investments Union. Davy has consistently advocated for a more simplified and accessible tax regime to encourage household investment, which continues to lag other European countries. A clear roadmap is a step in the right direction but meaningful reform is required if Ireland is to unlock genuine retail participation in capital markets.” 

“The reduction in the fund exit tax from 41% to 38% is a modest but welcome adjustment. However, it is disappointing that the Budget did not address the eight-year deemed disposal rule, which taxes unrealised gains and remains a significant deterrent to long-term diversified investment. The Government had previously signalled that it would consider abolishing this rule, and its omission today is a missed opportunity to remove a well-recognised barrier to investment.”  

“We believe it is essential that future budgets fully align the taxation of funds and ETF's with the 33% Capital Gains Tax rate applied to direct equities and property. Removing the deemed disposal rule and harmonising tax treatment across investment products would help create a product-neutral environment, allowing investors to choose the most suitable investments based on merit rather than tax distortions. This is the type of reform that would help foster a stronger culture of long-term saving and investment in Ireland, consistent with emerging EU best practice." 

Supporting Irish capital markets

Damian Roddy, Head of Davy's Capital Markets, said:

“The introduction of a stamp duty exemption for Irish SMEs and start-ups with a market capitalisation below €1 billion is a welcome and timely measure. It directly reduces the cost of accessing public markets and sends a strong signal of support for homegrown businesses seeking to scale and compete internationally.”

“This is a step in the right direction and aligns with recommendations made in our Pre-Budget Submission 2026, which highlighted the need to support Ireland’s public capital markets. However, there is more to do. Further reforms to improve liquidity, broaden investor participation, and scale Irish-listed companies will be essential if we are to fully unlock the potential of Ireland’s capital markets to grow the domestic economy.”

Housing

Kevin Timoney, Chief Economist at Davy, said: 

“We welcome the suite of measures in Budget 2026 aimed at unlocking further housing delivery, particularly in the apartment sector, which has consistently lagged due to viability challenges. The reduction in VAT on completed apartments from 13.5% to 9% is a significant step in addressing the cost barriers to higher-density development and should help close the viability gap that has constrained supply in urban areas.” 

“The €5 billion capital investment commitment for housing next year, alongside enhanced tax supports for cost-rental schemes and apartment conversions, reflects a more targeted approach to stimulating supply. These measures, combined with reforms to the Residential Zoned Land Tax and the extension of the Living City Initiative, signal a broader effort to regenerate urban areas and tackle dereliction.” 

“Ireland’s housing shortfall remains acute, and apartment delivery is central to meeting demand. Today’s announcements are encouraging and sustained progress will depend on continued reform of planning processes and infrastructure delivery. We hope that these fiscal supports will be matched by improvements in construction productivity and planning efficiency to ensure housing output can scale meaningfully over the coming years.” 

CGT Entrepreneur Relief

Niall Pilkington, Associate Director, Financial Planning, said:

“Revised Entrepreneur Relief currently provides a reduced rate of 10% CGT for qualifying entrepreneurs. In a welcome development, the lifetime limit on gains to which the relief applies is increased from €1 million to €1.5 million for disposals made from 1st January 2026. For a qualifying entrepreneur, who sells their business at a gain of €1.5 million, under current rules they would pay CGT of €265,000.  Once this change is adopted, the CGT liability in this scenario should be €150,000 which could result in a potential CGT saving of up to €115,000.”

“There was no mention of increases to the CAT thresholds which is disappointing given the appreciation of property values. We believe there should be a full review of all CAT thresholds with a particular focus on Group A (parent to child) to take account of the rise in asset values and wider inflation." 

Pensions

Fergal Roche, Financial Planning Manager at Davy, said:

“There were no changes to private pensions announced in Budget 2026. Minister Chambers noted the introduction of pension auto enrolment from 1st January 2026 is expected to benefit around 750,000 people. This is a welcome initiative designed to increase pension coverage more broadly across Ireland.”

“We laid out several additional measures in our Pre-Budget Submission 2026, calling for a national effort to promote retirement planning from early working life through to drawdown. Simplifying the pension system and ensuring access to expert, independent advice are key to helping individuals build secure retirements. We hope to see further progress on these items in future budgets.” 

“There is some further detail expected in the Finance Bill 2025 with additional amendments to the tax treatment for the Auto-Enrolment Retirement Savings Scheme already confirmed.”

Banking

Diarmaid Sheridan, Davy's Senior Director of Equity Research, Product and Financials analyst, said: 

“The Bank Levy has been extended into 2026 as expected with the yield unchanged at 200 million for the third year in a row.” 

Davy’s Pre-Budget Submission 2026 

Davy is Ireland’s leading wealth manager and investment bank, servicing private and corporate clients in Ireland and the UK, as well as institutional investors globally. Our 2026 pre-budget submission, published earlier this year, reflects the insights of our clients, the expertise of our research analysts and the perspectives of global investors on the Irish economy. 

Rather than attempting to represent every viewpoint, we focused on five areas of national significance. These are the issues we believe are most critical to Ireland’s long-term economic resilience and social wellbeing.

For full details, you can read the full pre-budget submission.