Budget 2026 Unveiled: The Game-Changing Move That Could Skyrocket Your Startup Overnight – Are You Ready to Capitalize?
Predicting the yield from corporation tax must be one of the trickiest puzzles in the Department of Finance’s playbook. I mean, how do you plan a budget when your crystal ball keeps showing wildly different numbers? Last spring, the forecast was €29.3 billion, then six months later it soared to nearly €34 billion—a difference that could make any budget planner’s head spin. With €6 billion extra dancing on the horizon, it’s no surprise that ministers Paschal Donohoe and Jack Chambers decided to open the taps on spending. Budget 2026 isn’t holding back, setting a €118 billion expenditure ceiling with a juicy bump of almost 7% on last year. But here’s the kicker: experience tells us that many departments have a habit of ignoring those ceilings, so expect the real numbers to climb even higher. Still, despite a spending spree and a fairly hefty income tax lift on everyday earners, they’re projecting a nice little surplus of €4.5 billion by year-end. That mix of unpredictability and opportunity—how’s that for keeping businesses, consumers, and entrepreneurs on their toes? Ready to dive into the details? LEARN MORE
Budget planners in the Department of Finance (DoF) find it very hard to accurately predict the yield from corporation tax (CT), writes Nick Mulcahy.
Last April, in the spring forecast, DoF number crunchers were projecting a tax take from business profits for the full year of €29.3bn.
Six months later, when the budget came around, that number was revised to €33.9bn. For 2026, the CT yield forecast in the spring was €28bn.
Now the projection is €34bn, a massive difference of €6bn. With this bounty on the horizon, it’s little wonder that ministers Paschal Donohoe and Jack Chambers have turned up the money spigot.
Budget 2026 sets the government’s total gross voted expenditure ceiling for 2026 at €118bn, an annual increase of €8bn, or 6.8 per cent.
The actual outcome will likely be higher, as recent experience has been that many departments ignore their budget ceilings.
Even with this blowout, the current DoF expectation is that the government will end 2026 with an excess of income over outgoings of €4.5bn.
Some of that surplus will come from hard-pressed income earners.
In the absence of adjustments to tax bands and credits in the budget, ministers expect to extract an additional €2.3bn income tax revenue next year, an increase of 6.3 per cent.
That downer for consumer spending is somewhat offset by generosity for recipients of weekly welfare payments, who will share an extra €1.2bn through 2026.
Along with the benefit of a higher minimum wage, the 20 per cent of households categorised as the poorest will see disposable income increases of 3.5 per cent to 4.5 per cent next year.
Despite worries over the Trump tariffs, personal consumption is projected to end this year 2.9 per cent higher than 12 months ago.
In 2026, DoF economists believe this momentum will continue, underpinned by wage gains, though the rate of annual increase will decline.
With no let-up in government current and capital spending, the outlook for business should be good. DoF economists believe real (inflation adjusted) Gross National Income, the economic measure that excludes activity by non-Irish multinationals, will expand by 3.3 per cent in 2026, the same performance as this year. For some business sectors, the push factors are substantial.
Budget 2026 earmarked €19bn for capital outlays, an annual increase of 28 per cent.
In the Department of Housing, Local Government and Heritage, the capital budget has risen from €4.5bn to €7.2bn, while there’s more infrastructure investment provision too across areas such as transport, education, health and environment.
For enterprises not reliant on state contracts, there were some pull incentives outlined in Budget 2026.
These include increasing the R&D tax credit rate from 30 per cent to 35 per cent and reducing the VAT rate on the sale of new apartments to 9 per cent.
For many business owners, the most interesting move was increasing the lifetime limit on gains qualifying for Revised Entrepreneur Relief from €1m to €1.5m.
This relief ensures that shareholders with at least a 5 per cent stake pay only 10 per cent capital gains tax on proceeds from a business disposal instead of the normal CGT rate of 33 per cent.
The relief only applies to individuals who spend at least half their time in the service of the company for a continuous period of three years, all of which must be served in the five years immediately prior to the disposal of the qualifying business assets.
The increased threshold may focus the minds of young entrepreneurs.
Most of them, the research suggests, aren’t incentivised by this relief when they commence trading.
The smart ones may start thinking of building to exit in a shorter timeframe and then repeating the trick.
Others contemplating a sale in the medium term will be conscious that Fine Gael and Fianna Fáil won’t be in government forever.
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