EY on Budget 2026- Shape the future with confidence

Budget 2026 is being developed at a time of heightened global complexity, shaped by shifting trade dynamics, evolving geopolitical tensions, and ongoing economic recalibration, Billy McMahon, EY Partner, International Tax and Transaction Services says.

Against this backdrop, Irish policymakers are expected to take a strategic and measured approach, balancing short-term pressures with long-term resilience.

Government finances remain robust, however in light of shifting global trade policies there is a growing sense of caution around a perceived over-reliance on corporation tax receipts from a small number of multinational groups.

Another factor which may contribute to a more cautious approach to Budget 2026 are calls for fiscal restraint from bodies such as the Fiscal Advisory Board and the Economic Social Research Institute (ESRI) in order to avoid increasing inflationary pressures by overheating an economy operating at capacity.

Another likely focus of this year’s package will be investing in Ireland’s critical infrastructure, including housing, energy and water, areas of particular importance to regional development and local communities. Infrastructure investment and the
delivery of key projects, including those set out in the National Development Plan Review, will be crucial for ensuring future economic prosperity and strengthening national resilience.

In communities across Ireland, including the Mid-West, the rising cost of essentials continues to shape public expectations. The forthcoming Budget will be closely watched for signals of support that can ease pressure on working families and local
enterprises.

The overarching approach for Budget 2026 is likely to be prudent and considered, this will be seen as a change for many individuals, who may be anticipating a package more similar to the so called ‘giveaway’ budget delivered last year.

While there may be potential increases to core social welfare payments, it is unlikely there will be a repeat of the once-off lump-sum welfare payments or universal credits of previous years. It is understood that the approach to welfare payments and personal tax credits will be more targeted.

On the tax side, the overall government ‘tax package’ has been signalled to be in the region of €1.5 billion. This package will be divided amongst a number of measures both for businesses and individuals, this includes a potential reduction in the VAT
rate for the hospitality sector.

Therefore, the scope for personal tax cuts is expected to be limited, with modest changes to personal tax credits and possibly a small widening of the standard rate band of income tax.

Budget 2026 looks set to be a balancing act amongst several competing interests, the overall health of the economy, future prosperity and national resilience being the guiding star.