Payroll 2026 – prepare for changes from January 1st in Ireland

Irish businesses need to implement 2026’s payroll changes including minimum wage increases, PRSI and USC changes, and auto-enrolment.

Minimum wage increases January 1st 2026

Budget 2026 announced an increase in the National Minimum Wage (NMW), effective from 1 January 2026. The NMW for people aged 20 and over will increase by 65 cents to €14.15 per hour.

Age group	Minimum wage from 1st January
20 and over	€14.15
19	€12.74
18	€11.32
Under 18	€9.91

Small Benefit Exemption from 1 January 2026

The annual limit on the Small Benefit Exemption will remain at €1,500. The maximum number of benefits that can be given to an employee tax free under the Small Benefit Exemption is 5 per year, subject to the cumulative value of those benefits not exceeding €1,500. 

Employers will continue to need 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 1st January 2026

After a few delays it’s here: auto-enrolment, the new retirement savings scheme for Irish employees, is coming in 2026. The introduction of the auto-enrolment Retirement Savings Scheme, called My Future Fund, will start from 1st Jan 2026.

• Employees between 23 and 60 who earn more than €20,000, and 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 Irish payroll changes in 2026 are:

• PRSI rates increase in October 2026: All PRSI rates (employee & employer) will increase by a further 0.15% on 01st October 2026.

• USC change – rate and bands: From 1st January 2026, the USC Rate 2 threshold will increase by €1,318 from €27,382 to €28,700 in line with the increase in the national minimum wage. The amount of income liable to USC at Rate 3 reduces by €1,318 from €42,662 to €41,344.

• Statutory sick leave remains up to 5 days.

• Benefit-in-Kind: The €10,000 Benefit-in-Kind (BIK) on the Original Market Value for company cars will remain for 2026, then reduce to €5,000 in 2027, €2,500 in 2028 and end in 2029. A new vehicle category (A1) is being created for zero-emission cars, from 1 January 2026. BIK on category A1 cars will be calculated at between 6% and 15% of the cars original market value (OMV), subject to business mileage.