Exchequer deficit falls to €2.3bn amid growth across major tax categories

While revenue was growing, total Government expenditure was growing faster

As of the end of last month, income tax receipts, Vat, and corporation tax receipts are all up compared to the same time last year. File photo

The Exchequer deficit has fallen in May to €2.3bn as tax receipts from the three major revenue streams show steady increase over the course of the year, the latest Exchequer Returns show.

During the first five months of the year, the Exchequer recorded a deficit of €2.3bn down from the €4bn surplus recorded during the same period in 2025 which also included proceeds from the Apple tax case ruling.

“When these revenues are excluded from 2025, a decline of €3bn was recorded in the underlying Exchequer balance, largely due to the timing of transfers this year from the Exchequer to the Future Ireland Fund (FIF) and Infrastructure, Climate and Nature Fund (ICNF),” the Exchequer said.

In April, the Exchequer deficit stood at €4.7bn.

Gross revenue for the first five months of the year stood at €49.2bn with total tax revenue hitting €38.7bn, which is €500m higher than last year. Non-tax revenue and capital resources for the year stood at €2.8bn, while appropriations-in-aid of €7.7bn brought total other revenue to €10.5bn.

So far this year, income tax receipts have reached €15.6bn, which is €1.1bn or 7.5% higher compared to last year. Of this, €3.2bn was collected in May. Corporation tax receipts of €2.7 billion were collected in the month bringing the cumulative total to €6.2bn - an increase of 9.1%.

May is a Vat due month with receipts of €4bn taken in. So this year, the Exchequer has received €12.2bn in Vat receipts, up 7.1%.

Receipts across these three categories are up 7.7% year-on-year or just over €2.4bn.

However, other tax categories have seen a decline.

The data also shows that the Exchequer took in €400m in excise duty receipts in May, a decline of 11.4% or €55m compared to the same time last year which likely reflects the Government’s temporary reductions on fuel excise. So far this year, excise receipts of €2.5bn have been collected which is down €94m year-on-year.

Stamp duty receipts are down €22m to €702m while capital gains tax and capital acquisitions tax were down by €60m to €379m and €106m to €132m respectively.

Motor tax receipts of €412 million were flat year-on-year while custom receipts saw a marginal decline of €3m to €248m.

Government spending

Total expenditure up to the end of May stood at €51.5bn, of which €45bn was gross voted expenditure — up €3bn on last year — and non-voted gross expenditure of €6.5bn, which is an increase of €2.6bn year-on-year. 

This includes €3.3bn in transfers to the Government’s two savings funds.

Exchequer debt service spending stood at €1.6bn so far this year, down €600m due to higher debt servicing payments in March 2025, when the payment of a final coupon on a bond took place.

Finance Minister Simon Harris said the Exchequer Returns point to a “resilient” economy despite the global economic turmoil adding that the growth in income tax and Vat receipts has been “robust”.

Head of tax at KPMG Ireland Orla Gavin said May receipts across the key tax pillars of income tax, corporation tax and Vat “have yet again outperformed last year, with total tax receipts up by €2.2 billion or 6.1% on last year”.

“Year on year growth of 7.5% in income tax receipts was notable in the context of restructuring within parts of the technology sector, suggesting that job losses to date have not materially impacted the broader labour market and instead point to a rebalancing of roles across the economy.”