Minister for Finance Paschal Donohoe has confirmed there will be no changes to personal income tax in next week’s budget.
Changes to personal tax bands and credits have seen effective reductions of income tax worth more than €1,000 in recent budgets.
The Irish Times reported on Thursday an expected VAT cut for hospitality, a reduction in VAT for apartments, the continuation of the renters’ tax credit and the lower VAT rate for gas and electricity all mean the Government will have no room for changes to income tax.
Speaking at a press conference as he announced the latest exchequer returns, Mr Donohoe said Budget 2026 will be focused on “targeted measures that we believe can make a difference in supporting households with the rising cost of living”. However, on taxation measures, he said: “Our focus is on jobs, and it’s on investment”.
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The long-mooted VAT cut for food hospitality businesses is being pitched as a measure to protect jobs.
Mr Donohoe also said: “The most important thing we can do in preparing a budget is to put in place the measures that will help keep jobs within our country… and get more jobs in the future.”
He said: “How we will do that from a taxation perspective will be with regard to measures that can enhance the competitiveness of our country and support further investment.”
Mr Donohoe said the consequence of this was that changes in personal taxation would not be made in the budget.
The overall tax package in Tuesday’s budget is set to be in the region of €1.5 billion.
Mr Donohoe said: “That is the biggest tax package that I believe is safe to implement within our economy.
“If we were to go beyond €1.5 billion, that runs the risk over time of narrowing our tax base and undermining safety in our public finances and the ability to pay for our public services in the future.”
He said previous changes to income taxes have cost about €1.2 billion to €1.3 billion.
