A strong start to 2026: Labour market momentum drives Exchequer stability
After a record breaking 2025, the positive momentum for the exchequer has broadly continued into early-2026. Although a deterioration of €2 billion has been recorded since last year, this aligned with the timing of transfers to the Future Ireland Fund (FIF) and Infrastructure, Climate and Nature Fund (ICNF).
February 2025 saw exceptionally strong income tax receipts and 2026 was no different as the growing momentum behind the labour market has resulted in the stabilisation of the unemployment rate, yielding returns of €6 billion.
Additionally, bonuses and share awards following a successful 2025 for many corporates has likely contributed to the strong returns.
While February is not typically a significant month for corporate tax receipts, corporate tax receipts were predictably down due to the absence of the Apple back-payment and another one-off payment in February 2025.
However, the €0.9 billion wasn’t a dramatic change on last year and our view remains that it will be June at the earliest before any potential negativity in corporate tax receipts might emerge. This assessment is underpinned by exceptionally strong trade performance in 2025, with goods exports increasing by 16.4% to reach record levels, driving a substantial trade surplus. This points to a very positive year in profitability terms for large multinationals based here, which should in turn feed through to corporation tax receipts in 2026. It is also worth noting that Ireland’s corporation tax rate increased to 15% under the OECD global minimum tax framework, which may provide some additional uplift to receipts, all else being equal.
While February marks a steady month for the exchequer, with continued global headwinds in the face of ongoing tariff threats and instability caused by conflict in the Middle East, it remains to be seen if these robust returns can be maintained long term.
June will prove to be a key month, as companies begin making preliminary corporation tax payments for 2026, offering a clearer signal as to whether last year’s strong business performance is being maintained in 2026. The first payments of the top up tax will also become payable that month.
Related content
