They said no and they meant it. There were no surprise energy credits in Budget 2026.
The last of the periodic payments that shaved €1,500 off soaring electricity bills since 2022 was delivered in February.
Despite a record number of customers being in arrears on their electricity and gas bills, the measure is not continuing. This was repeatedly signalled by Ministers in recent months.
In a smaller gesture, the VAT reduction on electricity and gas is being extended to the end of 2030.
RM Block
VAT was applied at a rate of 13.5 per cent up to 2022 when it was temporarily reduced to 9 per cent as a cost-of-living support at the height of the energy crisis. The reduction has applied in six-monthly rolling extensions since, but it is now confirmed to remain in place for the next five years.
The average annual saving on a household electricity bill will be about €53 while an average of €40.50 will be saved on a gas bill.
Minister for Finance Paschal Donohoe said he was “conscious of the fact that energy prices remain high”.
He said the measure “should go some way to alleviating energy costs pressures across the year for households”.
In another move to assist with high energy prices, the fuel allowance is being increased for the first time in four years. It rises from €33 per week to €38 per week, effectively immediately. Paid for 28 weeks between September and April, that works out an additional €140 over the winter period.
Eligibility for the allowance is also being widened to include recipients of the Working Family Payment. That will bring an additional 50,000 low-income households into the scheme, which assists about 400,000 households.
A move that will benefit up to 140,000 households with rooftop solar panels, is the continuation of an income tax disregard for earnings from the sale of surplus electricity to the national grid. The move, introduced in 2023, allows these “micro-generators” to earn up to €400 annually (or up to €800 where two people are income-earners and bill-holders) before becoming liable for income tax.
The exemption, intended to encourage more people to provide clean energy, is being extended to the end of 2028.
Much of these extra payments and exemptions will be covered by revenue from the carbon tax on fossil fuels, which increases by €7.50 per tonne of carbon dioxide emitted.
The increase, which raises the tax to €71.50 per tonne of CO2, applies to transport fuels with immediate effect and to home heating fuels from next May.
Revenue from the tax will exceed €1 billion for the second year in a row this year and just over two-thirds of that will be ring-fenced for measures to tackle fuel poverty, progress climate action and support just transition programmes and sustainable farming initiatives.
The Warmer Homes Scheme, which provides free retrofits and energy efficiency upgrades to low-income households, is one example, although the revenue also provides grants to help homeowners fund their own retrofits.
A few other tweaks will go some way to taking the edge off energy costs for select groups of people.
The €5,000 Vehicle Registration Tax exemption for electric vehicles is being extended to the end of December 2026.
A new category of Benefit in Kind tax is being created for zero emission cars so employees will pay the lowest rate of this tax if their employers provide electric company cars rather than other models.
For businesses, the accelerated capital allowance scheme that eases the upfront costs of installing energy efficient equipment is being extended until the end of 2030.
