Budget 2026 Tax Strategy Group papers

The Tax Strategy Group (TSG) has published its annual papers in advance of Budget 2026. The TSG is chaired by the Department of Finance and comprises senior officials and advisers from several governmental departments and offices. The TSG is not a decision-making body, rather its purpose is to outline the tax policy considerations for the Government and the options available to it in forming this year’s Budget.

The allocation for taxation measures in this year’s Budget is €1.5 billion (out of a total package of €9.4 billion). This is the starting point for making informed predictions of what we could see announced later this year. For example, increasing the standard rate band from €44,000 to €46,000 would cost the Exchequer €505 million (full year cost), with an increase in the primary tax credits (e.g. personal and employee tax credits) of €100 costing the Exchequer €570 million (full year cost). Assuming we will see some increase in the standard rate band and tax credits (as in recent years), it suggests that a substantial portion of the tax budget will need to be deployed toward income tax. This is not informed by anything other than a high-level review of the TSG papers themselves.

On the corporation tax side, there is helpful commentary on the position of the OECD Two-Pillar Agreement. Regarding Pillar One, agreement has yet to be found and the path forward remains challenging. In relation to Pillar Two, the coexistence of the Pillar Two rules and US tax system is currently being worked through as the US view their domestic measures as equivalent to the Pillar Two rules. However, there are important distinctions between the two systems with potential for a lower effective rate for US headquartered multinational enterprises.

In this year’s papers, the TSG notes that the near-term outlook is clouded in uncertainty due to tariffs and geopolitical shifts. The full list of papers released by the TSG are as follows:

• Income Tax (TSG 25/01) includes a summary of tax yields, information on the distribution and burden of income tax and USC and vulnerabilities within the personal income tax system. Other items discussed include the rent tax credit, SARP, tax relief for micro-generation of electricity and accelerated allowances for slurry storage. Tax relief for gym membership and a measure regarding farm income volatility were also examined.
• Social Protection (TSG 25/02) discusses government priorities and costing options for Budget 2026.
• Corporation Tax (TSG 25/03) provides an overview of corporation tax trends, current status of the OECD BEPS Project (including Pillar One and Pillar Two), EU tax developments, an update the Funds Sector Review 2030 and business support measures.
• Enterprise Tax Supports (TSG 25/04) examines tax-based enterprise support schemes to benefit the SME sector.
• Capital Taxes (25/05) contains a review of Capital Acquisitions Tax, OECD recommendations and international comparisons and models costings for possible changes. A Capital Gains Tax review is outlined along with the cost of changes to the headline rate.
• Stamp Duty Pensions and Property Taxes (TSG 25/06) outlines the current position, latest statistics and developments in Stamp Duty, the pensions landscape, the Residential Zoned Land Tax, the Vacant Homes Tax and Local Property Tax. It also sets out a proposed change to the reporting requirements for Approved Retirement Funds.
• Value Added Tax (TSG 25/08)  outlines the rates and structures of VAT and recent VAT changes and provides international comparisons with the EU and UK. In addition, it looks at policy changes in VAT and future VAT developments.