There will be a push for another €12 increase in weekly social welfare rates as part of next month’s budget, the Irish Examiner understands.
There is still an ambition to ensure that there will be a €50 increase in weekly rates between now and the end of the Government’s term of office in 2029.
However, there is expected to be further pushback from Fianna Fáil to Fine Gael’s desire to implement different social protection increases and pension rate increases.
It is also expected that the income tax package in Budget 2026 will be “significantly smaller” than in previous years. However, tax breaks for property developers are not being ruled out.
“That door isn’t shut yet,” one senior Government source said.
It comes as public expenditure minister Jack Chambers conceded that it will be "challenging" to implement VAT cuts for the hospitality sector from January 1.
He said it should be sequenced to take account of other tax measures in October’s budget.
Budget 2026 will take place on October 7, with intensive discussions expected to take place this week ahead of the Dáil’s return on Wednesday.
It is understood there will be a push from social protection minister Dara Calleary for a €12 increase in weekly social welfare rates.
This would be in line with increases secured in previous budgets under former minister Heather Humphreys.
However, it is expected that there will be less money available in Budget 2026 as there will be no one-off cost-of-living measures this year.
One senior Government source said the coalition does not have as much money as it did in previous years.
There is also a firm belief that the Government does not want to give away too much in the social protection budget and then be forced to cut rates if there is an economic struggle.
Ministers have already been warned the budget this year will be starkly different to previous years due to the threat of US tariffs and the uncertainty this causes for the Irish economy.
However, it is understood there is still a desire to increase social protection payments by €50 a week over the course of five budgets. This may lead to different increases each year.
There is also an acceptance that, as in previous years, the final amount agreed may be less than what was initially sought.
There will be pushback to any Fine Gael suggestions that the pension rate should increase by more than the payments for the unemployed.
One Fianna Fáil source pointed out that previous Fine Gael social protection ministers had tried and failed to implement this change and the idea will once again be shot down by their coalition partners.
Meanwhile, Mr Chambers warned he could not say how much better off workers would be after Budget 2026. At the Fianna Fáil think-in last year, he was able to predict that €1,000 would be put back into their pockets through tax changes.
At this year’s think-in at the Rochestown Park Hotel in Cork, Mr Chambers said there is “limited scope” to provide income tax cuts in the upcoming budget.
He admitted the tax package is “very limited” and there are significant measures required to be delivered within the €1.5bn.
“The nature of the tax package will be a little different this year and part of that is to drive competitiveness in the economy and also to around the supports that we’ll make from an expenditure perspective,” Mr Chambers said.
He cited measures such as the VAT rate cut for hospitality and plans to advance a new R&D tax credit.
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