Minister for Finance Paschal Donohoe has delivered his Budget 2026 statement to Dáil Éireann. Within his speech he announced a series of measures designed to boost Ireland’s “resilience” (a word both he and Minister Chambers used again and again), to shield the country against the economic uncertainty that has rocked much of the rest of the world in the face of global turbulence and new trade barriers.
The speech contained a welcome announcement that the R&D Tax Credits scheme is to be enhanced with the credit rate in Ireland rising to 35%, and the first-year payments threshold going up to €87,500. Both measures will deliver real, valuable benefits to hard working businesses across Ireland and further cement the scheme as one of the most generous and attractive in the world.
While there is certainly more to be done to modernise R&D Tax Credits, as well as increase access and visibility (especially for SMEs), the government did promise that in the next few weeks further details would be announced on how they plan to improve the scheme. We look forward to learning more about these proposed improvements.
You can read the full details below, where we also summarise all the key updates affecting innovative businesses in Ireland.
R&D Tax Credits
Budget 2026 recognised the value of innovation, proclaiming research and development as a “key driver of economic growth and high value employment”. As part of the government’s strategy of remaining an attractive place for foreign and domestic investment, Minister Donohoe announced a series of measures aimed at improving the R&D Tax Credits scheme.
For accounting periods commencing on or after 1 January 2026:
- The R&D Tax Credits rate will rise from 30 per cent to 35 per cent of qualifying expenditure
- The first-year payment threshold will increase from €75,000 to €87,500
This rise in the R&D Tax Credits rate makes the scheme more valuable than ever with its generosity. The increase in the first-year payment threshold is also good news for SMEs and companies that tend to invest in smaller, lower-cost R&D projects.
Minister Donohoe also said that there would be a “Research and Development compass” published sometime over the next few weeks. This “compass” will consider further targeted changes in areas such as outsourcing and qualifying expenditure definitions, as well as setting out a plan for developing innovation supports in Ireland. Once this document is published, we’ll be able to give you a full breakdown of how this will impact the R&D Tax Credits scheme.
Accelerated Capital Allowances
The statement included an announcement on extending the Accelerated Capital Allowances schemes for energy efficient equipment and for gas vehicles and refuelling equipment for another five years (until the 31st of December 2030).
Innovation
The Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, Jack Chambers, announced €1.3 billion of investment to help boost enterprise and digitalisation.
Part of this money will help to fund Enterprise Ireland, to help businesses in Ireland scale their innovation, access global markets and create high-quality and sustainable jobs.
The money will also support a series of measures aimed at boosting market diversification, competitiveness and productivity as well as promoting both foreign and local investment across all the regions of Ireland. A new National Artificial Intelligence Office was also announced, with the goal of helping to manage the safe development of this critical new technology, which will likely play a huge rule in supporting many R&D breakthroughs in the near future.
Find out more about Leyton
Today’s budget has increased the generosity and value of the innovation incentives on offer from Revenue, with further improvements expected in the upcoming Finance Bill. If your business is investing in research and development, there has never been a better time to consider how the R&D Tax Credits scheme can boost your funding.
Not sure if you’re eligible for the scheme, or have a question about any of the measures announced in Budget 2026? We’d be happy to help. Get in touch for an informal chat today.
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