What Are the R&D Tax Credit Changes in Ireland for 2026?

Ireland’s R&D tax credit rate increased from 30% to 35% as part of Budget 2026, announced on 7 October 2025. This is expected to take effect for accounting periods from 1 January 2026.

A company spending €500,000 on qualifying R&D now receives €175,000 in credit instead of €150,000. That is €25,000 more, with no change to the underlying process.

This article covers what changed, worked examples at three spend levels, and whether you need to do anything differently for your next claim.

Key Takeaways for 2026

• The R&D tax credit rate rises to 35% for all companies for accounting periods beginning on or after 1 January 2026
• The first-year payment threshold increases to €87,500
• The new 100% emoluments rule simplifies administration for R&D-heavy teams

What changed in Budget 2026 for R&D Tax Credits?

The headline change is straightforward: the R&D tax credit rate rose from 30% to 35% for qualifying R&D expenditure in accounting periods beginning on or after 1 January 2026.

To put that in real terms: if your company spent €200,000 on qualifying R&D in 2025, you received a €60,000 tax credit. Under the new rate, that same spend generates a €70,000 credit. That's an extra €10,000 returned to your business for doing exactly what you were already doing.

When you combine the credit rate with Ireland's 12.5% corporate tax rate and the availability of a cash refund for loss-making companies, the overall package is genuinely difficult to match in the EU and shows a deliberate policy signal to attract international R&D investment.

The eligibility rules and qualifying cost categories are unchanged. What you could claim before, you can still claim, but now at a higher rate.

What does the 35% rate mean for your claim?

Here is what the rate increase means at three common spend levels:

If you are already claiming, your next claim will be worth more with no change to the process. If you have not started claiming yet, the higher rate makes this a good moment to review whether your activities qualify.

Does the rate change affect payment structure?

No – the structure remains the same, but there is an increase in the first-year payment threshold.

The threshold is being raised to €87,500, to be in keeping with the rate increase. This is great news for SMEs and early-stage companies who can receive more of their credit earlier on.

Here's how the threshold has evolved:

• Accounting periods beginning on or after 1 January 2023 and before 1 January 2024: €25,000
• Accounting periods beginning on or after 1 January 2024 and before 1 January 2025: €50,000
• Accounting periods beginning on or after 1 January 2025 and before 1 January 2026: €75,000
• Accounting periods beginning on or after 1 January 2026: €87,500

Under the standard payment structure, R&D tax credits are paid out over three years: 50% in year one, 30% in year two, and 20% in year three. But if your total credit is at or below the first-year threshold, you receive the full amount in year one.

For companies whose total qualifying credit is at or below the €87,500 first-year threshold, the full amount is payable in year one. For loss-making companies, the refundable credit remains available regardless of tax liability.

What's changing for R&D employee costs?

There's also a quiet but important administrative change for companies with large R&D teams.

Under the previous rules, you needed to apportion the time spent on R&D by all employees. This meant working out exactly how much time everyone had spent on R&D, using timesheets where possible.

The new rule introduces a 100% emoluments qualification for employees who meet a 95% time-spent threshold. Now employees who spend 95% or more of their time on qualifying R&D activities can now be included in full, without having to work out the exact amount through timesheets or estimates.

For R&D-heavy businesses — whether that's a pharmaceutical company running a dedicated research division, a software company with a full-time development team, or an engineering firm with specialist innovation staff — this reduces the administrative burden significantly. You're spending less time on compliance paperwork and more time on the work that earns you the credit in the first place.

Do you need to do anything differently?

For most claimants, no. The rate that applies depends on when the accounting period begins. Expenditure in periods starting from 1 January 2026 is assessed at 35%.

You should continue to assess your projects’ eligibility in the same way as before, as well as the vast majority of your costs. The only changes will be when calculating the rate and the first year payment, and simplifying your apportionments for R&D personnel.

If you are unsure how this applies to your situation, it is worth confirming with a R&D tax credit adviser. Tax Cloud applies the correct rate automatically for periods from January 2026, so if you are using the platform your calculations will already reflect the new rate.

Whether you are reviewing an existing claim or working out whether your activities qualify for the first time, the 2026 rate increase makes it worth taking a closer look. Get in touch with our team to explore how the new rate applies to your business.