Ireland Budget 2027: Key Payroll, Tax and Employment Changes for Employers

Ireland’s Budget 2027 has confirmed a range of changes affecting employee pay, employer costs and payroll administration from 2027. Following our previous article on the measures under consideration, the Budget announcement on 6 October 2026 provides greater clarity on the changes employers now need to prepare for. 

For organisations with employees or operations in Ireland, the key considerations include changes to income tax, USC and employer PRSI, alongside an increase in the National Minimum Wage and greater flexibility around Enhanced Reporting Requirements. These measures will be particularly relevant to payroll, HR, reward and global mobility teams planning for 2027. 

The standard rates of income tax will remain unchanged at 20% and 40%, but the income thresholds at which the higher rate applies will increase from 2027. 

The Standard Rate Cut-Off Points (SRCOPs) will increase as follows: 

Personal and Employee Tax Credits will each increase by €125, from €2,000 to €2,125. The Home Carer Tax Credit will also increase by €100, from €1,950 to €2,050. 

These changes should generally increase take-home pay for eligible employees, although the impact will vary according to individual circumstances and the employee’s wider tax position. 

There will be no change to the €13,000 USC exemption threshold or to the standard USC rates. 

However, the upper limit of the 2% USC band will increase by €1,600, from €28,700 to €30,300. 

The 3% rate will therefore apply to income from €30,300.01 up to €70,044, with the 8% rate continuing to apply above €70,044. 

The change is particularly relevant alongside the increase in the National Minimum Wage. It is intended to ensure that employees earning the new minimum wage for up to 39 hours per week remain outside the higher USC rates. 

For payroll teams, the key change is therefore the threshold rather than the rate itself. 

From 1 January 2027, the weekly earnings threshold for the higher employer Class A PRSI rate will increase from €552 to €600. 

This provides some offset against the increased employment cost associated with the National Minimum Wage, particularly for employees whose weekly earnings are close to the threshold. 

A further 0.15 percentage point increase in PRSI rates is scheduled for 1 October 2027, and employers should factor this into 2027 workforce cost forecasts alongside the revised threshold. 

The National Minimum Wage will increase by €0.79, from €14.15 to €14.94 per hour, for hours worked from 1 January 2027. 

The increase will directly affect employers with employees paid at or close to the statutory minimum. It may also have wider implications where pay structures, allowances or other remuneration arrangements are linked to minimum wage levels. 

Employers should review affected pay rates ahead of January and consider the associated impact on employer PRSI and wider workforce costs. 

Budget 2027 introduces greater flexibility in how employers report certain employee benefits under the Enhanced Reporting Requirements (ERR). 

Currently, employers are required to report relevant benefits to Revenue on a real-time basis when they are provided to employees. From January 2027, employers will have the option to continue reporting in real time or report the information by the 14th of the following month. 

The reporting requirement itself remains, but the additional option may be useful for organisations where benefits information is gathered across HR, reward, payroll and finance teams or is not readily available at the point a benefit is provided. 

For multinational organisations, it is also an opportunity to review how Irish benefits reporting connects with wider payroll and HR processes. 

The Government will review the Cycle to Work Scheme during 2027, with the aim of exploring ways to increase participation. 

The TaxSaver Commuter Scheme will also undergo a comprehensive review to reflect changing commuting patterns and working arrangements. 

These are reviews rather than immediate changes to payroll treatment. Employers offering these benefits should nevertheless monitor developments as they may influence future employee benefit strategies. 

Several other Budget measures may be relevant to employers from a total reward, employee wellbeing or mobility perspective. 

The Rent Tax Credit will increase for 2027 and 2028: 

from €1,000 to €1,150 for a single person 

from €2,000 to €2,300 for a jointly assessed couple 

The tax-free threshold under Rent a Room Relief will increase by €2,000 to €16,000 from 1 January 2027. The relief will also be extended to certain newly installed detached auxiliary dwellings between 32 and 45 square metres, with the change backdated to structures installed since 27 July 2026. 

For first-time buyers, the maximum income tax refund available under the Help to Buy scheme will increase by €5,000 to €35,000, effective from 7 October 2026. 

These measures are primarily personal taxation changes, but may be relevant where employers are reviewing total reward, financial wellbeing or wider remuneration strategies. 

The standard Capital Gains Tax rate will decrease from 33% to 31% for disposals made from 7 October 2026. The 33% rate will continue to apply to disposals of development land. 

For internationally mobile employees with equity, investment or share-related interests, this may be relevant when considering the tax treatment of disposals and wider remuneration arrangements. 

The practical impact of Budget 2027 will vary according to an organisation’s workforce profile, but payroll and HR teams should focus on a number of immediate priorities: 

Revenue has confirmed that 2027 Revenue Payroll Notifications (RPNs) will be available from early December 2026 and will be updated in real time from 1 January 2027. Employers should request 2027 RPNs for employees for the first 2027 payroll run and should not use 2026 RPNs for payments made in 2027. 

This also applies where income relates to work performed in 2026 but is paid in 2027. The payment must be processed using the 2027 RPN and the 2027 tax credits and rate bands. 

For internationally mobile employees, changes to Irish income tax, USC and PRSI can affect assignment cost projections, hypothetical tax calculations and net pay outcomes. 

Where employees move into or out of Ireland during 2027, payroll, HR, tax and global mobility teams should ensure the relevant Irish changes are reflected alongside the rules applying in the employee’s other country of work or residence. 

Coordination between payroll, HR, tax and mobility teams will therefore be important when reviewing 2027 assignment costs and remuneration arrangements. 

With the key Budget measures now announced, employers should move from monitoring developments to preparing for implementation. 

Payroll and HR teams should review payroll configuration, workforce cost forecasts, employee benefits and reporting processes ahead of the relevant implementation dates, while continuing to monitor the Finance Bill and Revenue guidance. 

For organisations managing payroll, mobility and HR across multiple jurisdictions, keeping Irish legislative changes aligned with wider workforce processes will help maintain accurate and compliant payroll operations. 

For further detailed guidance on payroll, employment law and compliance requirements in Ireland, visit our Ireland Global Insights page on the activpayroll website. 

Employers should now assess the confirmed Budget 2027 measures and consider what they mean for payroll, employee pay, benefits and workforce costs. 

For more information on how these changes may impact your business, please get in touch. Complete our Contact Us form and a member of our expert team will be happy to assist with your queries.