PRSI Rates Increase on the 1st of October 2026

From the 1st of October 2026, employers and employees in Ireland will face increases to Pay Related Social Insurance (PRSI) rates. Both employer and employee contributions are rising, affecting payroll costs and take-home pay. Understanding these changes is essential for employers and employees to prepare for the new rates.

This blog is part of a series on Celebrating National Payroll Week 2026: The Numbers Every Payroll Team Should Know.

What is PRSI?

PRSI is a form of social insurance payroll tax paid by both employers and employees in Ireland. It funds the state’s social welfare and healthcare systems. PRSI contributions entitle workers to various social welfare benefits including unemployment support, disability payments, maternity benefit, and pensioner supports.

PRSI is calculated as a percentage of gross earnings for employees and on payroll for employers. Class A is the standard employment class and applies to most private sector workers. There are different PRSI classes for self-employed workers, civil servants, and other employment types.

What is the employee PRSI rate increase coming in October 2026?

From the 1st of October 2026, the employee Class A PRSI rate increases from 4.2% to 4.35%. This represents an increase of 0.15 percentage points. The increase applies to gross earnings from the date of implementation.

For an employee earning €30,000 per year, this additional 0.15% amounts to an extra €45 in annual PRSI contributions. For someone earning €40,000, the increase is €60 per year. The increase applies only to earnings above the PRSI exemption threshold.

What is the employer PRSI rate changes coming in October 2026?

Employer PRSI rates also increase from the 1st of October 2026. The standard employer PRSI rate rises from 11.25% to 11.4% for employees earning above the threshold. The reduced employer PRSI rate increases from 9% to 9.15% for employees earning up to €441 per week.

These changes represent increases of 0.15 percentage points for both the standard and reduced rates. The threshold for the reduced rate is set at €552 per week, which is approximately €2,392 per month or €28,704 per year.

What’s the impact of the PRSI increase on employers?

The PRSI increase will raise employer payroll costs. For an employee earning €30,000 per year on a standard contract, the additional employer PRSI at 11.4% versus 11.25% amounts to approximately €45 per year. For an employee earning €50,000, the increase is €75 per year.

Employers must budget for these increased costs from October onwards. The increase applies to all payroll processed from that date forward. Employers should make sure that they use payroll software that can automatically applies the new PRSI rates.

What’s the impact of the PRSI increase on employees?

Employees will see a small reduction in take-home pay due to the increased PRSI contribution. The 0.15% increase is modest but will be noticeable in monthly payslips. Employees should understand that this contribution funds their future entitlements including state pension, unemployment support, and other welfare benefits. The higher contribution rate reflects increased government investment in social protection.

How can I best prepare for the PRSI increase?

Employers should prepare for the PRSI increase well in advance. Make sure you use payroll software that updates the new PRSI rates from the 1st of October 2026 automatically.

Employers should also consider the cumulative impact of the PRSI increase alongside Auto Enrolment contributions. From 2026, employers are likely already contributing to Auto Enrolment. Accurate budgeting and planning are essential.

How does BrightPay update the new PRSI rates?

Modern cloud payroll software, like BrightPay, automatically applies the correct PRSI rates based on the pay date. BrightPay will be updated to reflect the new rates from the 1st of October 2026. Employers using the cloud version of BrightPay do not need to manually adjust calculations or download the latest version of the software. It will already be updated in the background, ready for you to use.

Summary of PRSI rates for 2026 in Ireland

• From the 1st of October 2026, employee Class A PRSI increases from 4.2% to 4.35%

• Employer standard rate increases from 11.25% to 11.4%

• Employer reduced rate increases from 9% to 9.15% for employees earning up to €552 per week

• Employers must update their payroll systems and budgets accordingly

• Employees will see small reductions in take-home pay due to increased contributions

Make manual updates and downloads for your payroll software a distant memory this autumn by switching to BrightPay.

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.