€285 Child Benefit, no tax cuts for Irish workers & €244 welfare freeze in Budget 2026 latest as €2.2bn package axed
The Fine Gael TD said no changes are being made to next year's spending plans - despite the US President slapping 15 per cent tariffs on Ireland and threatening to hit our pharmaceutical sector harder.
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Finance Minister Paschal Donohoe Minister for Public Expenditure Jack Chambers pictured after Budget 2025 last October
Credit: Brian Lawless/PA Wire
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Tanaiste Simon Harris has claimed that people on the dole should not get the same budget pay bounce as pensioners while Ireland is at full employment
Credit: Cillian Sherlock/PA Wire
It comes as the Coalition faces calls to splash the cash on supports for families in October's Budget despite already ruling out a repeat of last year's €2.2 billion cost of living package.
Ireland has run a €4billion surplus so far this year with the Coalition coming under pressure to spend these resources to help hard-pressed families.
But Donohoe has ruled out a cost of living package and played down spending, claiming this year's budget will be "more normal" than 2025's bonanza package, which was the largest in the State's history.
He said the €2.2billion spent on this package last year may be needed to protect public services and keep public finances safe.
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Donohoe said: "Packages of that scale were in place when we had inflation of five, 10, 15 percent. And we should not and I believe will not repeat that again."
Taoiseach Micheal Martin said the coalition would do what it could to alleviate the cost of living but ruled out a specific cost-of-living package.
It is understood that boosts worth up to €1,000 per worker will be slashed from the budget.
We have outlined everything you need to know about Budget 2026 so far - and why workers may not benefit from any tax cuts despite a cost-of-living package being axed from October's plans.
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ONE-OFF PAYMENTS RULED OUT
Government leaders have agreed on the complete elimination of one-off payments such as energy credits, double welfare and Child Benefit double boosts.
The one-off cash boosts benefited the average worker by about €1,000 each.
Last year, 1.4 million people benefited from double social welfare payments at Halloween and Christmas.
It included €400 for those on the Disability Support Grant or Working Family Payment, and a €300 lump sum payment for Fuel Allowance-eligible households.
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There was also €280 for those eligible for Child Benefit.
Public Expenditure Minister Jack Chambers previously told the Irish Sun: "We have said we're going to move away from one-off temporary measures.
"I think when we're making decisions we have to consider them in the context of the overall fiscal parameters that we've set out."
Minister Donohoe warned that the record Social Protection package including 10 lump sum payments won't be repeated in Budget 2026.
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He said: "Yes, the cost of living is still high. I know it's a huge challenge for so many, but we don't have the inflation levels - the five per cent and 10 per cent - that we had for so many years that necessitated spending billions of euro to help offset prices going up.
"And it is correct, therefore, to say at this point in time that we can't repeat those kind of measures again and we will need to make sure that we have the enhanced strength in our economy and in our public finances to deal with the kind of risks that we're outlining."
SOCIAL WELFARE FREEZE
An independent think-tank has called for ALL weekly social welfare rates to increase by €25 and be benchmarked to average earnings in October's budget.
This would bring core payments to €269 a week in 2026.
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But Tanaiste Simon Harris recently claimed that people on the dole should not get the same budget pay bounce as pensioners while Ireland is at full employment.
He indicated that the Government may freeze the jobseekers allowance at its current level instead of including it in any social welfare increases in the upcoming budget.
The payment currently has a maximum rate of €244 each week for those who meet certain eligibility conditions.
WHAT WAS BUDGET 2025'S COST OF 'LIVING PACKAGE'?
THE last budget, which was announced in October, saw thousands of families across the country benefit from cost-of-living measures.
The package, which was worth €2.6 billion in total, was the largest social welfare package in the history of the State.
It was made up of a mixture of increased payments and once-off lump sums for social welfare recipients.
Other measures in Budget 2025 included an expenditure of €6.9billion and €1.4billion in tax changes.
Energy credits were also agreed as part of a €2.2 billion cost-of-living package included in Budget 2025 to help people through the winter.
Asked if the Government will separate the jobseekers allowance from other welfare hikes in the budget, the Tanaiste told the Irish Sun: 'I do always think there is merit in not looking at social welfare payments with uniformity across the board.
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'We've been talking a lot about college fees the last couple of days unexpectedly perhaps but roughly speaking the equivalent of €1.20 or €1.25 on every social welfare payment is roughly the equivalent of reducing the college fees by €1,000.
'I'm not convinced that you need to see as significant a rise in the dole as you do in the pension for example at a time when our country is in full employment and there's lots of supports out there for people getting into work and there is other supports out there for people who can't work for very many good reasons."
'TARGETED' CHILD BENEFIT
Social Justice Ireland has called for the increase of supports for families, urging the government to increase Child Benefit by €50 and increase Child Support Payments by €6 and €15.
But Minister for Social Protection Dara Calleary has ruled out upping the Child Benefit payment for everyone.
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Instead, the Fianna Fail man confirmed his department is "working on" a targeted new Child Benefit payment as part of "key" efforts to tackle child poverty in Ireland.
A "second tier" boost worth an average €285 each month would allow lower-income families to top up the existing €140-a-month benefit currently paid out to around 650,000 Irish families.
The €140 flat payment would still be paid to everyone, regardless of income.
WORKERS MISS OUT ON TAX CUTS
The Government is allowing scope for €1.5 billion of tax cuts in Budget 2026, according to the Summer Economic Statement.
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However, Irish workers are set to lose out in the budget if a planned lower rate of VAT for hospitality goes ahead.
The cost of reducing VAT for restaurants, bars and cafes will take up approximately €1 billion of the €1.5 billion available for tax cuts in the outline of Budget 2026.
Last month, Tanaiste Simon Harris told the National Economic Dialogue event that the Government had made a 'solemn commitment' to slash the VAT rate for the hospitality sector.
But the plan has sparked concerns that there will be little to no income tax cuts for hard-pressed workers.
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Minister Donohoe warned that tough decisions will have to be made in the budget as he will not be going above the €1.5billion tax package.
He said: 'It would not be right to grow the scale of our tax package with everything that we are confronting at the moment.'
BACK TO SCHOOL COSTS
There are currently no plans to increase or extend the Back to School Clothing and Footwear allowance grant for Irish parents.
But the Labour party has called for "urgent Government action" on spiralling back-to-school costs that are setting parents back an eye-watering €1,450 or €1,560 per child.
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Shock data from the Irish League of Credit Unions revealed that parents are now spending over €1,450 per primary pupil and €1,560 for those in secondary school.
Labour has called on the Government to make the Back to School Clothing and Footwear Allowance universal and restore the full €100 increase.
The means tested payment, received by over 236k families so far this year, is currently €160 for children aged 4-11 years and €285 for kids between 12-22 years.
Labour has also called on the Government to "permanently abolish" exam fees and "make school transport free for all" with a €27m investment.
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The party has also demanded a ban on voluntary contributions and called for a 20 per cent increase of capitation grants.
Labour TD's have also requested that Home Economics students get the same ingredient support that exists for the Woodwork and Metalwork subjects.
Minister for Social Protection Dara Calleary last year confirmed that the BSCFA will not cover extra costs parents face ahead of the school year.
When asked by Sinn Fein TD Louise O'Reilly if he is aware that many parents rely on back to school payments for help to pay for iPads or other devices used in the classroom, he confirmed the allowance only covers clothing and footwear.
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