Budget 2026 preview: Hospitality to eat into at least 45% of €1.5bn earmarked for taxes

Tax and wages

The Government estimated last year that a combination of tax adjustments and additional payments would make the average person €1,000 better off in 2025, but there is no such promise this time out.

Any changes to taxes are likely to be adjustments to tax bands to keep pace with inflation, and little beyond that.

With €1.5bn earmarked for tax cuts, the hospitality sector is expected to the be the main beneficiary, where a change to Vat is expected to eat at least 45% of the money available for tax measures.

Vat on restaurants and other food-serving businesses is set to be reduced from 13.5% to 9%.

During the pandemic, the same intervention was used across the hospitality sector to stem losses, but reverted in 2023.

Now, the intervention will return permanently — likely halfway through next year — but targeted on just the food industry, with hotels ruled out.

The tax cut has been driven by intense lobbying by the sector in recent years, highlighting rising costs in wages, insurance, and food costs in particular, with coffee prices rising by 150% in the last year alone.

However, the Vat cut will not entirely disappear into profits, with a 65c rise in minimum wage expected to be announced too, bringing it to €14.17 per hour.

While that increase will be criticised by employers in low-wage industries like hospitality and retail, it will be welcomed by workers, but is still shy of the €14.75 per hour living wage estimated by the living wage technical group.

Higher education

The more than 30,000 third-level students in Cork will be watching the budget closely to see what happens to student fees.

Confusingly, the expectation is that the Government will deliver a €500 reduction in the student contribution charge, but that will actually amount to a €500 increase on recent years.

As part of cost-of-living measures, the €3,000 student contribution fee was temporarily reduced by €1,000.

However, well before the budget was being designed in detail, higher education minister James Lawless came out and said the measure will come to an end this year.

By getting out early, he seems to have successfully built pressure for a permanent reduction of €500.

However, €500 will not mean much to students and families paying steep rents and grappling with the rising cost of living, where it seems like there will be no relief beyond a widening of bands for access to student grants.