The Budget is done and dusted for another year. This year’s Budget marked a clear shift in tone — away from last year’s pre-election giveaways and toward a more cautious, longer-term focus on sustainability.
Budget 2026 on the other hand took a cautious, long-term approach, avoiding short-term giveaways and focusing instead on a message of sustainable spending. A total package of €9.4 billion was announced, comprising €8.1 billion in public spending and €1.3 billion in taxation measures. This was against a backdrop of Ireland’s economy projected to grow by 3.3% in 2025 and 2.3% in 2026, based on the Modified Domestic Demand measure.
Amid global uncertainties and volatile corporation tax receipts, the Government has adopted a more cautious fiscal stance, prioritising the buildup of reserves through the Future Ireland Fund and the Infrastructure, Climate and Nature Fund, which are expected to reach €24 billion by end-2026.
The decision not to index income tax bands effectively results in a modest, indirect increase in income tax.
In our blog last month, we set out some recommendations for the Minister that were based on our day-to-day experience with clients, who in turn are trying to plan responsibly for their financial futures and make decisions that ultimately support wider economic growth. So, we thought it useful to circle back and review these recommendations.
Increase in the Small Gift Exemption
Unfortunately there was no move on this one, the current €3,000 annual Small Gift Exemption remains unchanged since 2004, despite significant inflation and increases in the cost of living. We just have to hope that it features in a future Budget soon, to support modest, tax-efficient wealth transfers across generations.
Increase in CAT Thresholds
Again, there was no progress on this one either. CAT thresholds, particularly Group A, have not kept pace with property price inflation, frequently resulting in the unwanted sale of the family home on death, for the sole reason of paying the CAT bill.
Reduction in Capital Gains Tax (CGT) Rate
At the risk of sounding like a broken record, there was no progress here either – at 33%, Ireland continues to have one of the highest CGT rates in Europe. This high rate acts as a deterrent to investment, business formation, and entrepreneurial activity.
Enhancing Entrepreneurial Relief
Finally, some good news! We believed that raising the limit to at least €3 million would reward risk-taking and wealth creation in a proportionate way, while also encouraging founders to reinvest proceeds into new Irish enterprises. Instead, from January 1st 2026, the lifetime limit under Revised Entrepreneur Relief will increase from €1 million to €1.5 million. This is a positive step for shareholders and company directors planning future disposals or succession events, and it may influence the timing of transactions in the short term. A further expansion would better support entrepreneurship.
Reform of Investment Fund Taxation
Again, there was some good news here. While taxation on funds and ETFs remains complex, a small first step toward simplification was made with the reduction of the exit tax rate from 41% to 38%. This is definitely to be welcomed as a first step. There was also mention of a roadmap to be published early next year, setting out the Minister’s intended approach to simplify and adapt the tax framework to encourage retail investment.
Unfortunately there was no mention of the abolition of the 8-Year Deemed Disposal Rule, or indeed no progress in relation to loss relief across investment funds. Ireland’s current regime for the taxation of investment funds remains somewhat outdated and acts as a barrier to prudent, long-term savings.
So overall, two of our five requests were partially listened to. This represents some progress, but there is a lot more to be done to create a more progressive environment for investment, entrepreneurial risk taking and wealth transfer.
If you would like to find out more about how any of these changes might impact you, please feel free to contact me at johnt@acuvest.ie.
