Irish Budget 2027: key takeaways for payroll
The 2027 Budget has been branded as setting out an ‘optimistic’ path forward for Ireland.
Taoiseach Micheál Martin said: “This is a Budget for families, for workers and helping people with rising costs.
“We’re putting more money back in workers’ pockets.”
To help businesses prepare, in this blog, we’ve covered the main announcements that impact payroll.
Minimum wage increase
The adult National Minimum Wage is set to rise by 79 cents, about 5.6%, from €14.15 to €14.94 per hour from 1 January 2027.
Niall Clarke, Lead Product Manager, added: “The age-related minimum wage rates for younger workers are set to increase proportionately.”
Income tax bands and credit
A personal income tax package worth €1.3 billion was announced, coming into effect from 1 January 2027.
The standard rate cut-off point has increased by €2,500, moving from €44,000 to €46,500 for a single earner.
Married couples and civil partnerships also see proportionate increases.
Both the 20% and 40% tax rates stay the same.
Additionally, the main personal, PAYE and earned income tax credits have each been increased by €125 to €2,125, and the home carer credit has increased by €100.
The Rent Tax Credit will also increase by €150 to €1,150 for a single claimant and by €300 to €2,300 for jointly assessed taxpayers.
Employer Pay Related Social Insurance (PRSI) rates and thresholds
The employer PRSI threshold rises from €552 to €600 per week from 1 January 2027.
The measure aims to help SMEs absorb the minimum wage increase.
Both employer and employee PRSI rates will also increase by a further 0.15 percentage points from 1 October 2027 (4.5% employee and 11.55% employer).
This follows the recent 1 October 2026 rise (4.35% employee and 11.4% employer).
Clarke offered some clarity on the rate increases, stating: “These rate increases are not specific to the Budget, but in fact stem back to an agreed approach from October 2024 to Oct 2028.”
Enhanced Reporting Requirements (ERR)
Budget 2027 announced a change to how employers report reportable benefits and tax-free expenses to Revenue.
Employers will be able to choose between continuing to report in real time (on or before the payment date) or reporting monthly, by the 14th of the following month.
However, the start date isn’t settled yet.
Clarke explained: “Continue the current on-or-before reporting process until the change is officially confirmed via Finance Act or Commencement Order.
“If the monthly option takes effect as described, the return would be due by the 14th of the following income-tax month.
“Confirm the final scope, deadline and start date with Revenue before changing your process.
“Review the current Revenue Enhanced Reporting Requirements guidance while the new rules are being finalised.”
TaxSaver and Cycle to Work review
Both Cycle to Work and TaxSaver schemes remain unchanged for now.
However, the Government has announced upcoming reviews:
- The Cycle to Work Scheme will be reviewed in 2027 to look at ways to increase participation.
- The Taxsaver Commuter Ticket Scheme will be reviewed to take into account the changes in working patterns for commuters since the scheme was initiated.
Navigating change with Paycheck Plus
As highlighted above, the 2027 Budget brings numerous changes that will impact payroll.
Is your business prepared? At Paycheck Plus, we specialise in navigating these complex changes.
Reach out to us today to learn more about how we can assist with these legislative changes and keep your payroll processes running smoothly.
Contact us today to get expert advice on payroll compliance and stay ahead of the 2027 Budget changes.