Irish businesses must be ready to implement 2025’s payroll changes and minimum wage increases and USC changes from Jan 1st, and prepare for autoenrollment.
Minimum wage 2025 increases January 1st
Budget 2025 announced an increase in the minimum wage, effective from 1 January 2025. The national minimum wage for people aged 20 and over will increase by 80 cents to €13.50 per hour.
|
Age group |
Minimum wage from 1 January 2025 |
|
20 and over |
€13.50 |
|
19 |
€12.15 |
|
18 |
€10.80 |
|
Under 18 |
€9.45 |
Small Benefit Exemption from 1 January 2025
The annual limit on the Small Benefit Exemption will increase from €1,000 to €1,500.
The maximum number of benefits that can be given to an employee tax free under the Small Benefit Exemption will increase from 2 to 5 benefits per year, subject to the cumulative value of those benefits not exceeding €1,500.
Employers will continue to report the following for each employee:
- The date the voucher or benefit is made available to the employee, and
- The value of the voucher or benefit.
Auto-enrolment starts 30th Sept 2025
Auto-enrolment, the new retirement savings scheme for Irish employees is scheduled for the start of 2026. The introduction of the auto-enrolment Retirement Savings Scheme, called My Future Fund, will start from 1st Jan 2026.
- Employees who earn more than €20,000, between 23 and 60, who don’t have a pension scheme already will generally be automatically enrolled into this system.
- Employees and employers initially each pay 1.5% of gross salary into the scheme, with an additional State top-up. For every €3 an employee puts in, the employer also puts in €3. The State will then top up by €1, meaning €7 will be put into the employee’s account.
Contributions will rise over 10 years. This “transformative scheme” is likely to create challenges for businesses as it rolls out, says Caroline Codd, who leads our payroll team. Our auto-enrolment guide includes what employers should do now.
Other payroll changes in 2025 are:
-
PRSI rates increase in October 2025: All PRSI rates (employee & employer) will increase by a further 0.1% on 01st October 2025.
-
USC change – rate and bands: From 1st January 2025, the 4% rate of USC will drop to 3%. The entry point for this rate will increase by €1,622, so it will apply to income between €27,382 and €70,044.
- Sick leave increase: In line with the Sick Leave Bill 2022, statutory sick leave entitlement is due to increase from five to seven days, effective from 1st January 2025. As of Dec 1st, the Department of Social Protection has not confirmed this change. Payroll should stay ahead of announcements in this area.
Make things simple with outsourced payroll services
As payroll becomes more complex, many Irish businesses are outsourcing their payroll & bookkeeping services for a simple and cost-effective approach.
Our expert teams can provide customised and compliant accounting solutions – at a fraction of the cost of employing qualified full-time staff.
Want to see if we can save your business time and money? You can see our services here or email caroline@paulodonovan.ie to discuss your needs.
Want to take the time and hassle out of payroll? See our services on our website or email caroline@paulodonovan.ie to discuss your needs.
