The introduction of the Automatic Enrolment (AE) Retirement Savings System, commenced on 1 January 2026, and the most recent increase in the National Minimum Wage (NMW) for 2026 are reflective of commitments in the Programme for Government 2025- Securing Ireland’s Future.
The National Minimum Wage increased by €0.65 in 2026, representing a 4.7% year-on-year increase. Changes to the National Minimum Wage in recent years have been reflective of a move towards a Living Wage, set at 60% of median wages. Earlier this year, as part of measures designed to bolster business resilience and support competitiveness, the Government agreed to adjust the timeline for the progression to a Living Wage until 2029. This decision should be considered in the context of significant increases in the NMW in recent years and the progress achieved in reaching a Living Wage to date.
Budget 2026 saw the introduction of a range of measure to support SMEs, in particular those operating in the hospitality sector. The Budget was a pro-enterprise Budget and was framed in consideration of the Action Plan on Competitiveness and Productivity and the Programme for Government. These measures include:
• A reduction in the Hospitality VAT rate from 13.5% to 9%, which will be introduced from 1 July 2025. This reduction will apply specifically to food/catering and hairdressing and addresses concerns raised by the sector about business viability.
• The Employer PRSI threshold was increased to ensure that employers do not pay the higher rate of PRSI for full-time workers earning the minimum wage.
• The R&D Tax Credit was increased from 30% to 35%, with SMEs due to benefit proportionally more from this change than larger firms subject to the minimum effective tax rate. The increase in the first-year payment threshold, from €75,000 to €87,500, is also specifically intended to support SMEs undertaking R&D.
• The lifetime limit of the Revised Entrepreneur Relief was increased from €1m to €1.5m, which provides a significant potential benefit for scaling companies. The relief applies a CGT rate of 10% on gains from the disposal of chargeable business assets, a reduction on the standard rate of 33%.
• The Key Employee Engagement Programme (KEEP) was extended for a further three years.
Nonetheless, I and my Government colleagues are cognisant that the cost of doing business has been an issue for firms in recent years. These have arisen from both the wider inflationary trends – particularly energy costs – as well as Government mandated changes, including the aforementioned changes, in the form of improvements to working conditions across a range of areas.
In September 2025, the Government published the Action Plan on Competitiveness and Productivity. The Action Plan includes a range of key actions that can be taken to strengthen Ireland’s competitiveness and productivity and reflects a whole-of-government approach to domestic drivers of competitiveness, focusing on areas firmly within our domestic control.
Furthermore, the Government also established the Cost of Business Advisory Forum in 2025, under the remit of my Department. The Forum is a tripartite collaboration bringing together various representative bodies spanning multiple sectors as well as the SMEs. The purpose is to jointly consider those issues that can lead to higher costs for businesses in Ireland, any associated regulatory or infrastructural issues that merit a changed approach, and those steps that could be taken to mitigate these issues.
Government will continue to monitor the economic environment and engage with business stakeholders in determining any further measures to be taken to address business concerns.
I would recommend that any small business owners looking to avail of government support to consult the National Enterprise Hub (NEH), which launched in July 2024. The NEH has been designed as an entry point to aid business owners find relevant supports and help for their business.
