Paschal Donohoe signals shift on developer tax breaks ahead of Budget 2026

Finance Minister Paschal Donohoe has softened his opposition to developer tax breaks as housing pressures mount ahead of Budget 2026

Minister for Finance Paschal Donohoe said: 'I have indicated on many opportunities in the past the concerns that I had regarding some incentives that we had in place within our property market and the long-term effects on that.'

Finance minister Paschal Donohoe’s opposition to tax breaks for developers appears to be loosening, as he acknowledged measures are needed to ensure more houses are built.

It comes as Taoiseach Micheál Martin confirmed there would be no extension of the State’s First Home scheme to second-hand homes in October’s budget.

During a meeting of the Oireachtas Budgetary Oversight Committee, Social Democrats TD Cian O’Callaghan questioned Mr Donohoe if tax breaks for developers were up for consideration.

Mr Donohoe said: “I’m looking at an array of different matters. I have indicated on many opportunities in the past the concerns that I had regarding some incentives that we had in place within our property market and the long-term effects on that.

"I still have that view and, at the same time, what we need to do is ensure more homes are built in Ireland."

Mr Donohoe added that the Government has made available €1.5bn for tax changes in the upcoming budget and he would not go beyond that.

“I’m working out now with our colleagues in Government regarding what would be the individual measures that will make that up,” Mr Donohoe added.

Earlier this month, Tánaiste Simon Harris said he would be “open to considering” some targeted tax breaks for developers, if it is focused on dealing with viability issues.

In New York, Mr Martin confirmed there would be no extension of the First Home scheme to second-hand properties, saying the priority would instead be on new build housing.

"The programme for government stands to be implemented over a five-year period. So obviously, not everything in the programme for government can be implemented in year one or in the budget. So the priority and targeting this year will be more on how we can encourage new builds."

Meanwhile, the Economic and Social Research Institute (ESRI) has warned that child benefits in Budget 2026 should not be universal and instead be directed “to those in greatest need” as part of a tighter spending package.

In its quarterly economic commentary for autumn 2025 published on Thursday, the ESRI said spending this year is running ahead of revised estimates, and a continuing reliance on windfall taxes from foreign investment has left Ireland vulnerable to outside shocks.

“The windfall nature of a large proportion of Ireland’s corporate tax receipts means that they could vanish quickly. The parallels to the collapse in building-related taxes at the outset of the economic crisis of 2007–2008 are clear,” the report said.

"We would urge the Government to move towards a surplus, adjusting for the windfall taxes. This would imply a much tighter envelope than envisaged in the Summer Economic Statement."

The report said resources should be more focused, citing its previous proposals for additional child benefit payments to be provided to those “in greatest need”.

It comes as justice minister Jim O’Callaghan has called for funds to be provided in October’s budget to allow for the recruitment of a further 1,000 Gardaí in 2026.

The Justice Minister also said he wanted to see additional resources provided for the international protection system, particularly to focus on speeding up decision’s for individuals seeking asylum.

He said this would reduce the expenditure on accommodation for international protection applicants.