What to expect from Budget 2026

Ireland’s Budget 2026 is set to be unveiled on Tuesday, 7th October 2025, and while it follows several years of expansionary fiscal policy, this year’s package is expected to be more restrained and targeted. 

Although much remains unknown, the Government has outlined the broad picture of the budget in the Summer Economic Statement and some initial signals in media have provided insight into what may be included. 

Overall Budget package 

The total budget package is expected to amount to €9.4 billion, comprising: 

• €7.9 billion in additional public spending, a 7.3% increase on 2025 
• €1.5 billion in tax cuts, which is more modest than in previous years 
• €5.9 billion is being provided for current expenditure while €2 billion has been earmarked for capital expenditure 

This marks a shift away from the large-scale one-off measures seen in recent years, with the Government stating that temporary cost-of-living supports will not be repeated in Budget 2026. It’s expected that the Government will take a more cautious response. 

Furthermore, the Government has stated that, should there be a deterioration in the tariff landscape, the quantum of the budgetary package will be reduced to ensure public finances remain on a sustainable trajectory. 

Future Ireland Fund contribution 

The Government will continue its commitment to the Future Ireland Fund, with 0.8% of GDP being contributed annually from 2024 to 2035. This fund is designed to support long-term fiscal sustainability in the face of demographic and economic challenges and is projected to grow to €100 billion by 2035. 

Potential changes  

Financial Services 

Removal of the Deemed Disposal Rule: It is hoped the eight-year deemed disposal rule for Irish-domiciled investment funds and life products will be removed. This rule, which taxes unrealised gains every eight years, has been criticised as a disincentive to investment in funds, which are typically the most appropriate vehicle for long-term diversified investment.  

Aligning exit tax with CGT and DIRT: Although there has been no formal indication it will be done in Budget 2026, the Programme for Government commits to reviewing recommendations from the Fund Sector 2030 review. This, among other things, recommended an alignment of the tax regimes to ensure investors are not penalised for investing in funds over investments which are subject to capital gains tax (CGT). Reducing the rate from 41% to 33% would put the rate in line with the CGT and deposit interest retention tax (DIRT) rates. 

We called for both the removal of the deemed disposal rule and the reduction of fund exit tax to 33% in our Pre-Budget Submission 2026 and would strongly welcome such moves if implemented. We believe these would greatly benefit retail investment in Ireland. 

Consumer 

VAT cut for the hospitality sector: A current point of contention is the proposed reduction of VAT from 13.5% to 9% for the hospitality sector. While this was a pre-election promise, there have been concerns raised over the €1 billion annual cost. During the Covid-19 pandemic, VAT on hospitality was reduced from 13.5% to 9% to help the sector deal with the challenges of restrictions on movement. The Government is considering delaying this cut until 1st July 2026 and is also assessing whether to extend it only to hospitality or the wider accommodation sector.  

Housing 

Although housing remains a top priority of Government, Budget 2026 is not expected to contain any big surprises. It is expected to reaffirm the Government’s commitment to extending the Help to Buy and First Home Scheme until 2030, in line with the Programme for Government. It will also confirm the previously-announced increase in capital spending on housing. 

In addition, a new housing strategy to replace Housing for All is planned, though this will likely be announced separately from the budget. There will also be a review of the Residential Zoned Land Tax (RZLT) in the coming months. Amongst the changes being called for include an exemption for agricultural properties by farmers.  

Davy Research’s analysis suggests Ireland will need 93,000 new homes per year into the early 2030s to meet demand. In our Pre-Budget Submission 2026, we argued that Government must prioritise measures that unlock zoned land, streamline planning approvals, and support the further development and deployment of modern methods of construction. 

Other tax and spending priorities 

Personal taxes: Although there has been no formal indication as such, previous budgets have included modest increases in the standard rate income tax band as well as a reduction in the Universal Social Charge. 

Capital investment: It’s expected that €2 billion will go towards infrastructure, particularly transport, housing, education and energy projects. 

Public services: €5.9 billion is being provided for current expenditure on public services. It’s expected that healthcare will continue to receive significant funding to support growing demand due to population growth and extended lifespans. 

Economic context 

Ireland’s public finances remain in surplus, largely due to strong corporate tax receipts. However, the Government has warned that these are concentrated among a few large multinationals and may not be sustainable. Current international trade uncertainty has exacerbated these concerns. As such, Budget 2026 is being framed with an eye toward fiscal prudence and long-term resilience, as opposed to shorter-term measures which have been a feature of many recent budgets.  

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 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 have 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. Below is a summary of our key themes.

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