In this edition of “Ask the Expert,” we’re speaking with Brenda Donohoe, Regional Sales Director at ABGi Ireland, about the recent increase in Ireland’s R&D tax credit rate and what it means for businesses investing in innovation.

Q | Hi Brenda, what exactly has changed in the Irish R&D regime?

From 1 January 2026, the headline R&D tax credit rate increases from 30% to 35% for accounting periods starting on or after that date.

That’s a meaningful shift. When you combine the 35% credit with the standard 12.5% corporation tax deduction on R&D expenditure, the overall effective benefit can reach up to 47.5% of qualifying spend, depending on the company’s position. In simple terms, for many businesses, almost half of qualifying R&D costs can be supported through the tax system.

Q | Why is this such a significant development?

It’s not just about the percentage increase. A more generous credit changes behaviour.

It can help justify larger R&D budgets, support longer development cycles, and strengthen the internal case for investment, particularly within multinational groups that allocate R&D funding globally.  But this isn’t just relevant for multinationals. For SMEs and start-ups, the enhanced rate makes the credit an even more valuable source of funding.

For Irish-based companies, whether SMEs, start-ups or larger groups, the enhanced rate improves competitiveness and makes Ireland an even more attractive location for advanced manufacturing, software development, life sciences and other high-value technical activity. Any limited company undertaking genuine R&D should be exploring what this means for them in 2026 and beyond.

Q | Does the higher rate mean it’s easier to qualify?

No, and that’s important to stress. Companies still need to pass both the “science test” and the “accounting test.” That means demonstrating genuine scientific or technological advancement and real uncertainty, not just routine improvement or adoption of existing know-how.

At the same time, expenditure must be clearly identified and linked to qualifying activities. The rate has increased, but the standards have not been relaxed.

Q | What’s your advice for companies planning R&D activity in 2026 and beyond?

Don’t treat the 35% rate as automatic. If you want to benefit fully, make sure your technical documentation and cost tracking are robust from the outset. The companies that prepare properly are the ones who can confidently claim the enhanced rate without stress.

I’d also stress that the most accurate and defensible claims are those where activity and costs are documented and captured in real time, rather than reconstructed months later. Building good record-keeping habits into your R&D process from day one makes the claim stronger and the review process far smoother.

If you have any questions about how the 35% rate applies to your business, please get in touch with ABGI Ireland. We are one of Ireland’s trusted and leading R&D consultancies, with a proven track record of preparing robust, compliant claims that stand up to Revenue scrutiny. We help companies identify the right projects, separate qualifying work from business-as-usual activity, and prepare accurate, evidence-based claims with confidence.