Budget 2026 Predictions: What Contractors in Ireland Need to Know

With Budget 2026 fast approaching, professionals are keeping a close eye on what changes may be in store. Recent commentary from the Central Bank, government ministers, and advisory bodies has begun to shape the picture, signalling a budget focused on sustainability, targeted measures, and broadening the tax base rather than large one-off giveaways.

Economic Outlook

While domestic growth has been strong, at around 3% this year, forecasts suggest more moderate growth in 2026. The labour market remains robust, with 2.8 million people in work, but slower global trade and heavy reliance on multinational tax revenues add uncertainty. The message from government and advisory bodies is consistent: Ireland must invest for the long term while protecting fiscal stability.

A Budget Framed by Caution

The Central Bank has warned that the Government’s planned €9.4 billion package is “too large.” Their advice is clear: additional taxation will be needed if Ireland is to fund current and future commitments sustainably. This reflects a broader push towards fiscal discipline, with greater emphasis on permanent tax measures and long-term investment.

Minister for Finance, Paschal Donohoe, has acknowledged these concerns and also confirmed that Budget 2026 will aim to broaden the tax base further, prioritising resilience and investment over one-off supports.

Expected Tax Package

Expect a relatively modest tax package (c. €1.5bn) set against a broader budgetary package of roughly €9.4bn that prioritises current and capital spending rather than big across-the-board tax giveaways.

•               Carbon tax rises will continue, impacting energy and transport costs.

•               Income tax tweaks are likely to be modest, with indexation of tax bands and credits.

•               One-off payments unlikely: Unlike previous budgets, large one-off measures such as energy credits or universal cost-of-living supports are not expected.

Housing and Accommodation

Housing supply remains a major priority. The Government is expected to extend schemes like Help to Buy and the First Home Scheme, alongside new initiatives to support student accommodation projects.

Business and Sector Incentives

There is strong industry pressure to refine R&D tax credits and introduce targeted credits for AI adoption and decarbonisation investments. These measures would be aimed at keeping Ireland attractive to FDI and encouraging domestic innovation.

There is also continued discussion of Capital Gains Tax (CGT) reform, which could directly affect contractors operating through limited companies and planning eventual exits. While no sweeping reform has been promised, this remains an area to watch closely.

Hospitality VAT Debate

A pre-election promise to cut hospitality VAT from 13.5% to 9% remains on the table but is expensive (estimated near €650m–€1bn annually). The Government could delay implementation or narrow the scope to reduce the immediate cost.

Final Word

Budget 2026 will be less about short-term giveaways and more about building long-term resilience. For contractors, this means preparing for gradual tax changes, keeping an eye on sector-specific incentives, and planning for a future where stability and sustainability are the guiding principles of Ireland’s fiscal policy.