Ireland R&D Tax Credit 2026

Program Overview

Ireland's R&D Tax Credit provides a 35% credit on qualifying research and development expenditure as of January 2026. This represents the second increase in two years, rising from 25% at the end of 2023 to 30% in 2024, and now to 35% in 2026.

Budget 2026 announced this enhancement as part of significant reform of R&D tax relief, underlining the government's determination to invest in Ireland's innovation and knowledge economy.

Key Benefits

35% Tax Credit Rate: Credits equal to 35% of qualifying R&D expenditure (increased from 25% in 2023)

Enhanced First-Year Threshold: Amount claimable in full in the first year increased from €75,000 to €87,500

Employee Pay Treatment: Companies can now treat 100% of employee pay and benefits as qualifying expenditure if 95% of their time is spent on eligible R&D projects

Competitive Advantage: Significant encouragement for both multinational corporations and indigenous companies to base high-value innovation activities in Ireland

Eligibility Requirements

Qualifying R&D Activities: Must constitute systematic, investigative, or experimental activities in science or technology

Employee Time Requirements: For full employee cost eligibility, 95% of employee time must be spent on qualifying R&D projects

Irish Tax Resident Company: Company must be tax resident in Ireland to claim the credit

Documentation: Must maintain detailed records of R&D activities, costs, and time allocation

Qualifying Expenditures

Employee Costs: Salaries and benefits for employees engaged in qualifying R&D activities (100% if 95% time requirement met)

Overhead Costs: Building costs and expenses directly related to R&D activities

Consumables: Materials and supplies used in R&D processes

Outsourced R&D: Certain qualifying outsourced research activities

Claim Process

Identify Qualifying Activities: Determine which activities meet R&D criteria under Irish tax law
Calculate Eligible Costs: Track and calculate all qualifying R&D expenditures
Prepare Documentation: Compile detailed records of projects, costs, and employee time allocation
File Claim: Submit R&D tax credit claim with annual corporation tax return
Revenue Review: Irish Revenue may review claims and request supporting documentation

Strategic Impact

The 40% increase in the credit rate over two years (from 25% to 35%) demonstrates Ireland's commitment to maintaining its position as a leading European innovation hub and attracting high-value R&D activities from global companies.