Budget 2026 confirms a significant VAT reduction for the hospitality and personal services sectors, with the rate for food and catering businesses and hairdressing services to be cut from 13.5 percent to 9 percent. The change will take effect from 1 July 2026.
The measure is expected to cost €232 million next year and €681 million over a full year. It fulfils a commitment contained in the Programme for Government, and Minister for Finance Paschal Donohoe said the reduction will support more than 150,000 jobs nationwide.
Industry reaction has been broadly positive, particularly within the hairdressing sector. The Irish Hairdressers Federation welcomed the announcement, describing the rate reduction as an important support for a sector under financial pressure. However, the organisation expressed concern about the delay before the change takes effect. Representatives said many businesses had expected an earlier implementation date based on discussions with politicians ahead of the Budget, and warned that the lengthy wait until July could create uncertainty for salon owners already facing rising costs.
