Ireland Budget 2026: PRSI Rate Increases and My Future Fund Are Live — How BrightPay Keeps Irish Bureaus Compliant

Irish payroll bureaus managing multiple employer clients entered 2026 with a more complex compliance landscape than any previous year. Unlike many budget cycles where changes take effect on a single date, Budget 2026 introduced changes across four separate implementation dates: 1 January 2026 (minimum wage, USC, auto-enrolment launch), 1 October 2026 (PRSI rates), and ongoing throughout the year (auto-enrolment contributions, company BIK rules). Staying on top of this sequence — and ensuring every client payroll reflects each change at the correct time — is the core payroll compliance challenge for Irish bureaus in 2026.

My Future Fund: Now Live and Operational

Ireland’s auto-enrolment pension savings scheme — My Future Fund — launched on 1 January 2026 after years of planning and several deferred start dates. For employers with eligible employees who do not already participate in a qualifying occupational pension scheme, automatic enrolment is now a legal obligation.

The scheme operates on a phased contribution basis. In the initial phase (years 1–3), minimum total contributions are 3% of gross earnings, split between employee (1.5%) and employer (1.5%). The state makes a top-up contribution of 0.5% for each euro contributed by the employee, effectively adding further to the pot. Contributions increase in subsequent phases: years 4–6 at 6% total (2.5% employee, 2.5% employer, 1% state), years 7–9 at 9% total, and reaching 14% total in year 10 and beyond.

For payroll bureaus, the immediate obligations are: identify employees who are eligible for auto-enrolment (aged between 23 and 60, earning above €20,000 per year, and not already in an occupational pension scheme); begin deducting employee contributions and recording employer contributions from the first pay period; and report contributions to the National Automatic Enrolment Retirement Savings Authority (NAERSA) as required.

Employees have the right to opt out of My Future Fund after an initial six-month participation period. An employee who opts out within the first six months receives a full refund of their contributions. After the first six months, opt-outs can be made but contributions are not refunded. Re-enrolment applies every two years for employees who have opted out.

One notable Budget 2026 provision: employer contributions to My Future Fund are exempt from PRSI, reducing the employer’s effective contribution cost compared to an equivalent pay increase. Employer contributions are also exempt from Universal Social Charge.

National Minimum Wage: €14.15 per Hour from January 2026

The Irish national minimum wage increased by €0.65 per hour to €14.15 per hour from 1 January 2026. This is the highest minimum wage in Europe on a per-hour basis. Bureaus managing employer clients in sectors with minimum wage workers — retail, hospitality, care, and contract services — must ensure all affected employees’ pay rates were updated from the January 2026 payroll run.

Salary-sacrifice arrangements near the minimum wage floor require the same NMW compliance check as in the UK: post-sacrifice pay must remain at or above €14.15 per hour. For employers offering My Future Fund contributions through salary sacrifice rather than as a direct employer contribution, the post-sacrifice hourly rate must be verified for all affected employees.

USC Changes from January 2026

The Universal Social Charge (USC) 2% band threshold increased from €27,382 to €28,700 from 1 January 2026. This provides modest tax relief to employees earning within this band — the increase in threshold means approximately €1,318 of income that previously attracted the higher USC rate now falls within the 2% band.

The reduced USC rate (0.5%) continues to apply to those with a full medical card earning up to €60,000, extended to 31 December 2027. Bureaus should ensure that employees with medical cards are correctly flagged in the payroll system to receive the reduced rate.

For payroll systems, the USC threshold change required an update to the USC calculation from the first pay run of January 2026. Bureaus using BrightPay benefit from automatic rate and threshold updates — the correct USC figures are applied without manual configuration each time a budget change takes effect.

PRSI Rate Increases: October 2026

PRSI contribution rates will increase by 0.15% for both employees and employers from 1 October 2026, as previously announced in Budget 2024 as part of the phased PRSI roadmap to fund the My Future Fund state top-up and broader social insurance costs. From October 2026:

• Employee PRSI rate: 4.35% (up from 4.20%)

• Employer PRSI standard rate: 11.40% (up from 11.25%)

• Employer PRSI lower rate (weekly earnings €441 or less): 9.15% (up from 9.00%)

For bureaus running Irish payrolls, the mid-year timing of the PRSI change is the compliance risk. October payroll runs must apply the new rates from the first pay date on or after 1 October 2026. Bureaus using BrightPay will have the updated PRSI rates applied automatically from October — preventing the manual rate-update error that a mid-year change can cause in systems requiring manual configuration.

How BrightPay Supports Irish Payroll Compliance in 2026

BrightPay‘s Irish payroll module is maintained and updated by Bright’s dedicated Irish payroll team to reflect each Budget 2026 change at the correct implementation date. The auto-enrolment module manages My Future Fund enrolment, contribution calculations, employee and employer deductions, and the integration with NAERSA reporting. The USC calculation applies the revised band threshold from January. PRSI rates update automatically in October.

For bureaus managing mixed client bases — some with employees in the UK, some in Ireland — BrightPay handles both jurisdictions within a single platform, applying the correct rates and rules for each employee based on their employment location, without requiring separate systems for UK and Irish payrolls.

Frequently Asked Questions

This content may have been developed with the assistance of AI tools. Content is reviewed by a member of the Bright team before publication. Guidance on legislation can be obtained from your industry body.