Budget 2026: The old reliables — Smokers hit with price hike but alcohol escapes tax rise

Cigarette prices to rise by 50c in Budget 2026 as alcohol duties remain unchanged

The duty on a pack of cigarettes will increase as part of Budget 2026, while excise duty on alcohol remains unchanged.

The price of a 20-pack of cigarettes will rise by 50c from midnight tonight, bringing the cost close to €19.

Finance minister Paschal Donohoe said there will be a pro-rata increase on other tobacco products.

A tax of 50c per millilitre on nicotine-containing e-liquid for vapes, confirmed in September, will take effect on November 1.

This will add €1 to the cost of a standard 2ml disposable vape and double the price of a 10ml bottle of liquid for reusable vapes, from €5 to €10.

The Irish Heart Foundation described the 50c increase on cigarettes as insufficient, saying Irish cigarette prices remain lower than in the UK.

Its director of advocacy, Chris Macey, said tobacco tax is recognised globally as the most effective way to encourage smokers to quit and deter young people from starting.

“The Government had a target of getting smoking rates down to 5% by 2025 under the Tobacco Free Ireland policy," Mr Macey said. 

"The actual rate of 17% puts us in the region of half a million smokers short of that objective."

“In our pre-budget submission, the Irish Heart Foundation called for a €1.55 increase to bring the price of a pack to €20, or €1 per cigarette.

“If we are serious about eliminating the toll of 12 deaths every day caused by smoking, a much tougher approach to tobacco taxes is unavoidable.”

Alcohol

Excise duties on alcohol remain unchanged, despite calls from the drinks industry for a 10% reduction.

The government’s decision not to raise alcohol duties was criticised by Alcohol Action Ireland (AAI), which said it is the 12th consecutive year without an increase.

AAI said the public health value of alcohol duties has been eroded by inflation, leaving them at least 15% lower in real terms.

“With excise duties on tobacco rising by a substantial 50c on a pack of cigarettes, it is clear the government understands the value of price controls as a policy option to change consumer behaviour and promote public health," AAI said. 

"AAI therefore finds it disappointing that the Government refuses to increase alcohol excise duties, which would have the dual benefit of helping reduce population-level consumption and its associated harms, while at the same time raising much-needed revenue."

AAI chief executive Dr Sheila Gilheany said the move was another sweetener to the alcohol industry, “by a government that loves to promote its public health credentials when it comes to tobacco but chooses to look the other way when it comes to alcohol, which is strange considering alcohol harm likely costs the state twice as much."

Meanwhile, the Vintners’ Federation of Ireland (VFI) criticised the budget for failing to support traditional and food-led pubs across the country.

While welcoming the government’s decision to cut Vat on food services from 13.5% to 9%, the VFI said delaying the change until mid-2026 is unacceptable.

VFI chief executive Pat Crotty called the Budget a “bitter blow for traditional publicans,” even with the Vat reduction.

He added: “Food-led pubs must somehow survive the hardest months of the year without the Vat support they were promised, while the thousands of traditional pubs, which don’t serve food and form the backbone of rural Ireland, get absolutely nothing."

Fuel

Meanwhile, an increase in carbon tax will add 2.5 cent per litre to diesel and 2.1 cent per litre to petrol.

Mr Donohoe also announced that the government will extend the €5,000 VRT relief for electric vehicles until December 31, 2026.

“In relation to the benefit-in-kind regime for company cars, I am extending, on a tapered basis, the universal relief on the original market value of a vehicle which was first introduced as a temporary measure in 2023," he said.

“This relief will remain at €10,000 in 2026, reduce to €5,000 in 2027 and €2,500 in 2028, before being abolished in 2029.

“I am also creating a new vehicle category for zero-emission cars, which will qualify for the lowest BIK rates.”