Instead, money allocated to tax changes was used to fund a Vat rate cut for the hospitality sector and to fund incentives for builders.
Middle-income earners who get a pay rise will be €500 worse off over the next year because of the failure to adjust tax bands and credits.
Owen Reidy, general secretary of the Irish Congress of Trade Unions (Ictu), said there would be no happy new year for workers and he accused the Government of breaking its promises.
“The Government has left workers with next to no reason to welcome in the new year. It has failed to keep many of the resolutions made before the general election and in the new programme for government,” he said.
“In 2026, there will be no income tax indexation to take account of the increase in inflation or wage growth, because they blew the budget on a €0.7bn Vat handout to hospitality business owners.”
He said working parents would lose out because there would be no reduction in childcare fees from the capped €295 a week to get to the promised level of €200 a month per child.
There will also be no increase in the rent tax credit to help renters with huge housing costs.
Mr Reidy said there would be no living wage for 200,000 of the lowest-paid workers, who will have worked day and night to keep services running over Christmas week.
He said: “If Government hadn’t reneged on its commitment to reach a living wage on January 1, 2026, the minimum wage would be increasing by 95c to €14.45 instead of 65c.
Tánaiste and Finance Minister Simon Harris defended the decisions taken
“Adding on another three-year wait for a living wage, leaves minimum-wage workers up to €600 out of pocket in 2026 alone.”
Previous new years heralded changes to income tax credits and bands and increases in the rent tax credit.
Pay rises in the new year would push more people into the higher 40pc income tax bracket, director of Chartered Accountants Ireland, Cróna Clohisey, said recently.
In October, all workers were affected by the increase in 0.1pc employee PRSI.
PRSI went from 4.1pc to 4.2pc for employees.
This will cost someone on €50,000 a year an extra €56. Ms Clohisey calculated that a single worker on €50,000 would be €475 worse off overall.
But Tánaiste and Finance Minister Simon Harris defended the decisions taken.
He said the Programme for Government committed to “implementing progressive changes in taxation if the economy remains strong, including indexing credits and bands to prevent an increase in the real burden of income tax”.
Mr Harris said Budget 2026 had been designed to boost economic resilience and protect jobs in an uncertain international economic environment. It was the first of five budgets to be delivered by the Government, which remains committed to the make changes to income tax, if the economy remains strong, he said.
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