Budget 2026: €10 rise in State pension and core welfare rates secured in late night talks

Minister for public expenditure Jack Chambers and finance minister Paschal Donohoe put the finishing touches on Budget 2026 ahead of its announcement on Tuesday. Picture: Sasko Lazarov/© RollingNews.ie

Core social welfare rates will rise by €10 and fuel allowance by €5 in Tuesday's budget, with money being made available to increase student grant thresholds, provide thousands more childcare places, and add €500m to the disabilities budget.

The Government is set to announce Budget 2026, which will see a Vat cut for hospitality businesses, the continuation of the 9% Vat rate on energy, and a Vat cut for the building of new apartments. There will not, however, be a personal tax package.

Discussions went late on Monday as social protection minister Dara Calleary looked to settle his department's budget. Sources said Mr Calleary had "dug in" to secure a €10 weekly rise for pensioners and others on core social protection payments. 

Among the measures agreed elsewhere was the continuation of the rent tax credit, which had been due to expire at the end of 2025. It will remain at €1,000 for a single person, or €2,000 for a jointly assessed couple. This is due to cost €350m.

Likewise, mortgage interest relief will continue for two more years. However, the rate will be cut in half in 2027. 

In childcare, funding will be made available to provide thousands more places through a building blocks scheme which will allow existing services to fund extensions. Elsewhere, there will be five new beds funded at youth detention centre Oberstown.

Student grants

An extra 20,000 students will be eligible for student grants under changes to be announced on Tuesday. This is in addition to the €500 permanent reduction in student fees, as initially reported by the Irish Examiner last month.

Further education minister James Lawless will expand access to student grants by raising the household income threshold for Susi to €120,000, potentially benefiting over 20,000 students.

Arts minister Patrick O’Donovan has secured agreement that the basic income pilot scheme for artists will end next year, and it will be replaced with a permanent scheme that will be embedded in the department’s budget. This is despite reported pushback from the Department of Public Expenditure.

It is also hoped that 200 people can be added each year, starting from a base of 2,000.

The health budget was also settled on Monday night with an injection of €1.5bn, up 6.2% on last year’s allocation. The overspend in the health service is expected to be €250m this year, meaning there will be an overall increase in funding.

Sources say health minister Jennifer Carroll MacNeill wants to ensure “efficiency” within the system, and that all money that is allocated is being spent properly and to make savings in certain areas.

Education minister Helen McEntee, meanwhile, secured a Deis+ scheme that will target the highest levels of educational disadvantage. There will also be “significant investment” in special education, including 860 additional special education teachers and 1,700 special needs assistant posts.

A new education therapy service will see therapy supports rolled out directly into special schools, while there will also be in-school funding across primary and post-primary schools.