This Tuesday, October 7th, the Government released the much-anticipated 2026 budget. With the current global economy on the rocks, there’s been a lot of speculation and questions around what it would all mean for the Irish budget. Now that we have our answers, here is what Budget 2026 means for the hospitality industry and the changes you need to know about:
VAT 9
The Irish government has received a lot of pressure and feedback from the Irish hospitality industry to return the VAT rate for food and drink to 9%, as it was during Covid-19. It currently stands at 13.5%.
From July 1st, 2026, the VAT rate for food, catering, and hairdressing services will return to 9%. There will be no change for accommodation services.
This VAT change comes as a big win for the hospitality industry, who have been lobbying for the reduction to help the rising costs of business in Ireland.
Minimum Wage
From January 1st, the minimum wage will rise by 65c to €14.15/hr, which will affect over 201,000 employees currently earning the National Minimum Wage.
This is an additional payroll cost that hospitality employers will need to plan and prepare for before the new year. to learn more about offsetting payroll costs for your business, contact our team here.
Tax Measures
There has been no additional tax increase for the sale of alcohol, which will come as an additional relief to the hospitality industry. This will also help offset any additional costs on alcohol caused by US tariffs.
There has also been no change to income tax rates for neither employees nor employers (except for the 2% rate band limit for USC increase to €28,700 (from €27,382)).
Electric and gas bills will remain at a 9% VAT rate until 2030, which will also help employers reduce their business costs for the foreseeable.
