Budget 2026: What Was Announced?
Reduced VAT Rate Extension on Energy
The reduced 9% VAT rate on gas and electricity bills extends through December 31, 2030, preventing reversion to the standard 13.5%.
No Universal Energy Credits
A notable absence from this year's Budget is the introduction of the broad, one-off electricity credits for all households that were a feature of previous Budgets.
Targeted Energy and Heating Supports
Fuel Allowance:
- Weekly rate increases by €5
- Extended to Working Family Payment (WFP) recipients beginning March 2026 (backdated)
Microgeneration Relief:
Income tax exemption on €400 annual microgeneration income extended to end of 2028.
Retrofitting and SEAI Programmes:
Social housing retrofitting funding increased from €90 million to €140 million.
Energy Infrastructure Investment
€3.5 billion allocated to ESB and EirGrid for grid strengthening and renewable energy acceleration.
Carbon Tax
Increases to €71 per tonne CO2:
- Auto fuels: effective December 8, 2025
- Home heating fuels: effective May 1, 2026
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Extension of Reduced Energy VAT Rate
The 9% discounted rate, originally a temporary anti-inflation measure, now extends until December 31, 2030. Without this, the standard 13.5% rate would apply, significantly raising annual energy bills.
End of Universal Electricity Credits Sparks Concern
Previous budgets (2023-2024) provided universal credits worth hundreds of euros collectively. The removal marks a clear shift in fiscal strategy, moving away from broad-based handouts. Critics argue this risks increased energy poverty, particularly for households with existing bill arrears.
Targeted Support and Fuel Allowance Enhancements
Two primary measures:
- €5 weekly Fuel Allowance increase
- Expanded eligibility to Working Family Payment recipients (March 2026, backdated)
This addresses energy poverty among low-income working families who were previously excluded.
Climate Action and Infrastructure Investment
| Fuel | Increase | Total Tax |
|---|---|---|
| Gas | €18/year | €160/year |
| Petrol/Diesel | 3c/litre | 19c/litre |
| Home Heating Oil | €19/fill | €180/fill |
Estimates based on 11,000 kWh annual gas consumption; 900-litre oil tank.
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Our energy experts at Selectra compare all 11 Irish suppliers to find you the lowest rate for your home — completely free.
What Can I Do About Increasing Electricity Prices?
| Strategy | Details | Benefits |
|---|---|---|
| Switch Suppliers | Compare offers, move to new provider if out of contract | Significant discounts (often 30% or more) for new customers |
| Optimize Tariff | Ensure discounted contract; consider time-of-use if smart metered | Reduced night-time rates, lower overall costs |
| Actively Manage Usage | Energy-saving habits, efficient appliances, optimize heating | Lower monthly bills |
| Utilise SEAI Grants | Home insulation, window upgrades, heat pump installation | Massive long-term reduction in energy demand |