State Tax Revenues Up 7.3% Ahead of Budget 2026, Despite Dip in Corporation Tax
State tax revenues for the year to date are 7.3% higher than in 2024, according to the latest Exchequer Returns, leaving the Government in a strong fiscal position ahead of next month’s Budget.
When excluding one-off back tax payments from Apple, revenue growth stands at 4.4%.
Key Tax Categories
The August figures show:
- Income tax is up 4.7%, reflecting continued strength in the labour market.
- VAT receipts rose by 4.8%, indicating healthy consumer spending.
- However, corporation tax in August fell sharply by 42.8% year-on-year, though this drop is attributed to an exceptionally strong performance in August 2024.
For the year so far, corporation tax is up 1.1% when Apple-related payments are excluded.
Expenditure and Surplus
On the spending side, government expenditure has risen by 7.8% compared to the same period last year. The Irish Fiscal Advisory Council has repeatedly cautioned against such rapid spending growth, warning it could place pressure on public finances in the long term.
Minister for Public Expenditure, Public Service Reform and Digitalisation, Jack Chambers, acknowledged that spending is ahead of departmental plans but emphasized that the overrun remains relatively modest.
“Expenditure to this point in the year has supported continued investment in our public services and infrastructure and is delivering on key government priorities, including increased weekly Social Welfare payments and investment in our health services,” he said.
Surplus and Savings
The Exchequer recorded a surplus of €3.2 billion to the end of August, down from €3.8 billion in the same period last year. When Apple payments are excluded, this equates to an underlying deficit of €100 million, a deterioration of €3.9 billion year-on-year.
This decline is partly due to the Government’s decision to transfer €3 billion into two long-term savings funds, a move aimed at enhancing fiscal resilience over the coming years.