Dublin: The Irish government is set to announce a series of measures in next month’s budget, including tax breaks, welfare supports, and possible reductions in education costs. While internal disagreements remain, political observers expect the final package to deliver several voter-friendly measures.
The €9.4 billion spending plan outlined by Ministers Paschal Donohoe and Jack Chambers has drawn criticism from both the Economic and Social Research Institute (ESRI) and the Irish Fiscal Advisory Council (IFAC), who warn that it is excessively expansionary. Coalition partners are also divided over issues such as tax cuts and VAT relief for the hospitality sector.
Despite these tensions, expectations are high that the budget will bring significant relief. A repeat of the double child benefit payment—which last year supported more than 68,000 parents and 622,000 children—is anticipated, alongside a likely extension of the €250 energy credit to households. Reductions in third-level tuition fees of up to €1,000 are also being considered.
On welfare, Minister for Social Protection Dara Calleary is pushing to retain at least one of the two additional bonus week payments introduced by his predecessor, Heather Humphreys, which cost the Exchequer €350 million.
Tax reforms are also expected. Standard tax credits could rise from €160 to €200, with personal and employee credits increasing by €80–100 each. The income threshold for the top 40% tax rate is likely to be raised, while relief for renters and homeowners is under review. The Dáil Budget Office estimates that €739.5 million will be allocated for widening tax bands and credits, with an additional €65 million earmarked for USC reductions.
The hospitality sector is lobbying strongly for a cut in VAT from 13.5% to 9%, a move estimated to cost €1 billion but heavily backed by Fine Gael. At the same time, the government expects to generate €1.5 billion in additional tax revenues, with Treasury forecasts projecting €23.2 billion in income tax receipts for the first eight months of 2025—up €1 billion from the previous year.
The minimum wage is also set for an increase. Government proposals point to a rise to €14.15 per hour, which would place Ireland second in Europe, behind the Netherlands (€14.06) but below Luxembourg (€15.25). However, the trade union CIPTU has indicated the figure could be €14.17, while criticising the government for pushing its commitment to align wages with the cost of living from 2026 to 2029. CIPTU has accused ministers of backtracking on promises to essential workers.
Unlike previous years, the budget is unlikely to feature large one-off cash incentives. Instead, the government appears poised to shift its focus toward more sustainable long-term investments and infrastructure development.
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