Budget 2026: Key Highlights for SMEs and the Self-Employed

Published on October 7, 2025

The Minister for Finance delivered the Budget 2026 statement on 7 October 2025, setting out a range of tax measures designed to support Irish businesses, employees, and households. The overall theme is one of targeted relief and gradual reform.

From increased thresholds for entrepreneurs and landlords to extended incentives for innovation, electric vehicles, and housing, this year’s budget reflects a steady approach to long-term economic growth.

Here’s a detailed summary of the main updates affecting SMEs, the self-employed, and property owners, along with key implications for employers and individuals.

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Revised Entrepreneur Relief

The lifetime gains limit under the Revised Entrepreneur Relief has been increased from €1 million to €1.5 million.

This is a significant improvement for business owners planning to sell qualifying business assets.

Entrepreneur Relief allows those who meet the qualifying conditions to pay a reduced Capital Gains Tax (CGT) rate of 10%, instead of the standard 33%.

Example:

If a business owner sells qualifying assets in 2026 and realises a gain of €1.2 million, the entire amount would now be taxed at 10%, resulting in a €120,000 CGT bill.

Under the previous €1 million limit, only the first €1 million would have qualified for the reduced rate, with the remaining €200,000 taxed at 33%, leading to a total CGT of €166,000.

In short, the change provides a potential CGT saving of €46,000 for qualifying entrepreneurs.

Income Tax

The standard rate remains 20%, and the higher rate 40%, with the same income thresholds as in 2025:

Single or widowed person (no qualifying child): first €44,000 at 20%, remainder at 40%.
Single person child carer: first €48,000 at 20%, remainder at 40%.
Married or civil partnership (one income): first €53,000 at 20%, remainder at 40%.
Married or civil partnership (two incomes): first €53,000 at 20%, plus up to €35,000 for the second income at 20%; remainder at 40%.

An individual earning around €70,000 gross per year should see additional take-home pay of approximately €1,000 after tax cuts.

No changes to tax credits are announced for 2026.

VAT Thresholds

From July 2026:

The VAT rate for food, catering, and hairdressing services will reduce from 13.5% to 9%.
The 9% VAT rate on gas and electricity will remain until 31 December 2030.
The VAT rate on completed apartment sales also drops from 13.5% to 9%, effective immediately and continuing until 2030.

Employers

Minimum Wage

From 1 January 2026, the National Minimum Wage will rise by €0.65 to €14.15 per hour.

To ensure full-time minimum wage workers remain below the top USC rate, the 2% USC band ceiling will rise by €1,318 to €28,700.

The KEEP scheme has been extended until the end of 2028.

The SARP scheme has been extended for five years, with the minimum salary threshold increasing to €125,000.

Capital Gains Tax (CGT)

Revised Entrepreneur Relief

From 1 January 2026, the lifetime limit increases from €1 million to €1.5 million for qualifying disposals.

Electric Vehicle (EV) Measures

The universal EV relief will continue on a tapered basis:

€10,000 for 2026
€5,000 in 2027
€2,500 in 2028
Nil in 2029

A new zero-emission vehicle category will qualify for the lowest Benefit-in-Kind (BIK) rates.

The Accelerated Capital Allowances scheme for energy-efficient equipment is extended to 31 December 2030.

Property

Landlords – Retrofitting

Landlords can continue to deduct certain retrofitting expenses, with the deduction capped at the lower of €10,000 or actual cost. Extended for three years.

Rental and Mortgage Relief

Rent tax credit extended until December 2028.
Mortgage interest tax credit extended for two years, with a reduced value in the final year.

Housing and Stamp Duty

Residential Zoned Land Tax (RZLT): Landowners may request zoning changes to qualify for exemptions.
Bank Levy: Extended for 2026, based on eligible deposits as of 31 December 2024.
Residential Development Refund Scheme: Extended to 2030 with more flexible timelines and full refunds for multi-phase developments.
Market Capitalisation Exemption: Stamp Duty exemption for transfers of securities where the issuing company’s market cap is below €1 billion.

Corporation Tax (CT)

Film Relief: Enhanced 40% credit for productions with €1 million+ in VFX expenditure.
Digital Games Relief: Extended to 2031, now includes post-release work.
R&D Tax Credit: Increased from 30% to 35%. First-year refund cap rises to €87,500.
Enhanced Deduction for Construction: Applies to apartment developments and conversions of non-residential buildings into apartments.

Life Assurance & Investment Funds

From 1 January 2026, the tax rate on income and gains from:

Domestic and certain foreign life assurance policies
Irish-domiciled investment funds
Equivalent offshore funds in qualifying countries

will reduce from 41% to 38%.

Higher Education

The third-level student fee drops permanently by €500, from €3,000 to €2,500.

The SUSI grant threshold rises to €120,000, expanding access to financial support for students.

Agriculture

Accelerated Capital Allowances for Slurry Storage extended to 2029.
Young Trained Farmer (YTF) Relief extended to 2029.
Farm Consolidation Relief and Farm Restructuring Relief extended to 2029, now including woodland areas.
Flat-Rate Addition for farmers decreases from 5.1% to 4.5%.

Disclaimer

This summary provides a general overview and should not be regarded as a legal interpretation. TaxLink accepts no responsibility for any loss incurred based on this information.