Budget 2026 delivers boost for innovation, but more needed to drive AI adoption
The Government’s Budget 2026 announcement includes a welcome enhancement to Ireland’s Research & Development (R&D) Tax Credit, with the rate increasing from 30% to 35% and the first-year payment threshold rising from €75,000 to €87,500. These measures are expected to strengthen Ireland’s competitiveness as a destination for innovation and investment.
Further targeted reforms to the R&D Tax Credit are also expected in the coming weeks, including updates to better align the scheme with current industry practices in areas such as outsourcing and qualifying expenditure definitions. These refinements should provide greater clarity and flexibility for companies engaging in collaborative and cross-border research activities.
In addition to the R&D changes, the Minister for Finance announced an enhancement to the Section 481 Film Tax Credit, introducing a 40% rate of relief for productions with a minimum of €1 million in eligible visual effects (VFX) expenditure. The Digital Games Tax Credit has also been extended for a further six years, reinforcing Ireland’s commitment to supporting creative and digital industries.
While these measures mark positive progress for the broader innovation ecosystem, industry leaders note that Budget 2026 falls short in driving AI adoption and digital transformation. Despite Ireland’s ambition to be a leader in emerging technologies, no specific measures were announced to incentivise AI research, deployment, or upskilling, areas that are increasingly critical for long-term competitiveness.
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