R&D tax credit increase hailed as 'pro-investment and pro-innovation' 

Increases in research and development (R&D) tax credits in Budget 2026 have been welcomed as "pro-investment and pro-innovation". 

Increases in research and development (R&D) tax credits in Budget 2026 have been welcomed as "pro-investment and pro-innovation". 

The R&D tax credit will increase from 30% to 35%. The tax credits can act as a catalyst for growth, enabling businesses to increase capacity, invest in new technologies, build expert teams, and become more competitive, said John Cuddigan, head of RDJ's tax practice. 

The threshold for first-year refunds under the tax credit scheme will increase to €87,500 to support smaller projects. "The effective tax saving for a company with the increased R&D credit to 35%, is now up to 47.5%. An increase of €12,500 to the first-year refund is a great cash flow incentive for SMEs who are availing of this credit," said Mr Cuddigan. 

"This financial boost can provide the necessary resources to develop new products, expand into new markets, and attract high-skilled personnel, all of which can drive significant growth for SMEs." 

Irish Venture Capital and Private Equity Association (IVCA) chair Caroline Gaynor hailed the announcement. “The changes to the R&D tax credit in particular are forward-looking, encouraging more companies to take bold steps in research and development, while the measures to encourage private investment will help ensure that our economy continues to thrive in a rapidly evolving global marketplace," said IVCA director general Sarah-Jane Larkin. 

Cork Chamber chief executive Conor Healy said the R&D increase is a welcome step forward alongside the upcoming publication of an R&D Compass to set out further improvements in the coming weeks. 

Multinational companies will be some of the biggest benefactors from the R&D tax credit increase. "The increases in R&D tax credit will be crucial attract high-value research investment and enable Ireland to remain a top-tier location for research, development and innovation in the long term," said Paul Sweetman, chief executive of American Chamber (AmCham), representing US companies in Ireland.