Increase in funding to Local Authorities in 2026 announced as a result of Local Property Tax revaluation
- Foilsithe:
- An t-eolas is déanaí: 2 Iúil 2025
- €42 million increase in LPT baseline will bring total allocations to €744 million next year
- change in allocation model will also increase level of funding retained by some of the larger authorities for their own use
The Minister for Housing, Local Government and Heritage, James Browne and Minister of State for Planning and Local Government John Cummins today announced a €42 million increase in the Local Property Tax (LPT) ‘baseline funding’ to Local Authorities - bringing their total allocations to €744 million next year.
Local Property Tax ‘baselines’ are a significant indicator of the funding available to each local authority. Where a local authority’s local property tax yield is lower than the baseline, their authority is ‘topped-up’ by the exchequer to the set baseline.
Under today’s proposals by Minister Browne, each local authority’s baseline funding will be increased in line with yield expected in their area.
In addition, due to a change to the allocation model, there will be a further increase in ‘own-use’ funding for a number of authorities who take in Local Property Tax income above their baseline – they will now retain more of that income for their own use. It is expected by Government that additional money retained will be used for urban regeneration programmes and in Dublin, it will be used towards the implementation of Dublin City Taskforce recommendations.
LPT Revaluation
Today’s increase builds on a €75 million increase to baselines in 2024 in response to a review carried out the previous year.
This latest increase is in recognition of the Local Property Tax revaluation which is due to take place this November for the 2026 liability year.
The proposed changes to Local Property Tax bands and fixed charges will mean that most homeowners will remain in their current valuation bands, but will see an increase, mostly modest, in Local Property Tax charges next year.
Local Authorities will see increase in income as a result
Government has agreed that any additional Local Property Tax yield generated on foot of the changes - which is estimated to increase €42 million overall - must go directly to the local authorities.
As a result, each authority will see an increase in Local Property Tax income in line with the expected increase in yield in their area.
Baseline funding
Every local authority receives a minimum (‘baseline’) amount of funding from the Local Property Tax, supplemented by funding from the exchequer where a local authority’s Local Property Tax income is lower than its baseline.
This baseline funding is essential, and recognises the vital role played by local authorities in delivering a broad range of services day-to-day.
The baseline is a significant benchmark affecting the level of funding available to local authorities, and following these changes, will have increased by more than 33% in the three years to 2026.
A number of Local Authorities will retain more of the surplus for their own use
Furthermore, from 2026 those authorities with a Local Property Tax income above their funding baselines will now retain a greater proportion of that surplus for their own use.
- In 2023 this increased from 20% to 22.5% of overall yield
- From 2026 it will increase significantly further to 31% of overall yield.
- As before, the remainder of the surplus will be used to self-fund housing and/or roads in these areas in lieu of central exchequer funds.
Because of these changes to the allocation process and the baseline, the sector will see a year-on-year increase in total own use funding of over €85 million.
Announcing these significant changes to support work by Local Authorities across the country, Minister James Browne said:
“From the outset, I have been committed to ensuring that any additional yield earned from the Local Property Tax revaluation, goes directly to where it is needed in our local areas. Local Authorities play an essential role in the delivery of services to our people and our communities, and each of them will now see an increase in funding in line with their increased yield.
“Those who are paying local property taxes deserve to see their contribution at work in their local areas and today I have made changes to ensure more locally sourced revenue is spent where it comes from.
“I am announcing a further increase in funding to those authorities with yield above their ‘minimum funding baseline’. These authorities have seen a large increase in population and property numbers, and this will ensure they have the funds available towards regeneration programmes in their own urban centres. This is particularly important in carrying out the ambitious and essential recommendations made by the Dublin City Taskforce for our capital city.”
John Cummins, Minister of State for Local Government and Planning, welcomed the changes to Local Property Tax in 2026, and said:
“This is welcome news for local authorities who will all see a benefit in their yield for 2026 which is very important in the context of delivering services and key infrastructure projects in their areas.
“I do want to acknowledge Finance Minister Paschal Donohoe who worked with me to ensure that any additional yield from the LPT would be ring-fenced for use by local authorities.
“For the 10 surplus Local Authorities, they will see significant uplift which will assist them in delivering urban regeneration projects for the benefit of their growing communities.”
A Breakdown of funding by county is available in the Notes.
Notes
About ‘Baseline Funding’
Not all local authorities have the same ability to raise revenue locally.
Local authorities vary considerably from one another in terms of size, population levels, population distribution, public service demands, infrastructure and other income sources, all of which must be taken into account when comparing levels of funding in different local authority areas.
Appropriate levels of financial support have therefore been made available in order to support efforts by local authorities to adopt balanced budgets and to ensure that an adequate level of services is provided.
Current Model
Under the current LPT allocation model, every local authority has a minimum level of funding available to it, known as ‘the baseline’. There are variances across the country in terms of LPT levels but it is important that all local authorities receive at least this baseline level of funding to help ensure they can deliver adequate levels of service.
Equalisation
This ensures that all 31 local authorities receive a minimum amount of funding from the local retention of LPT that is at least equivalent to their LPT baseline.
If the estimated LPT yield in a local authority area is lower than an authority’s baseline, the authority is ‘topped-up’ or ‘equalised’ to that baseline.
When LPT yield is significantly higher than the baseline
In some local authority areas, the expected LPT yield is significantly higher than the baseline. In these areas, the local authority is required to spend a portion of that yield on housing and/or roads services.
This is referred to as self-funding.