Upcoming PRSI rate changes effective 1 October 2026: what employers need to know

Pay Related Social Insurance (PRSI) rates will increase again from 1 October 2026. Employers should check that their payroll systems are ready and review the effect on employment costs before the change takes effect.

What are the key changes from 1 October 2026?

The next stage of the Government’s phased PRSI increases will take effect on 1 October 2026. For Class A employees and their employers, rates will rise by 0.15 percentage points.

• Employee PRSI (Class A): the rate will rise from 4.20% to 4.35% of reckonable earnings. Employees earning €352 or less a week will continue to be exempt from employee PRSI. The sliding-scale PRSI credit will continue to apply where weekly earnings are between €352.01 and €424.
• Employer PRSI (Class A): the standard rate will rise from 11.25% to 11.40%. The reduced rate will rise from 9.00% to 9.15% for employees within the applicable weekly earnings threshold.

Since 1 January 2026, the weekly earnings threshold used to determine whether the standard or reduced employer PRSI rate applies has increased from €527 to €552 per week. This allows employers to continue applying the reduced rate to lower-paid employees, including many employees working full-time on the national minimum wage.

The rates that apply will depend on the employee’s PRSI class and earnings. Employers should check the relevant classification and threshold for each employee rather than assume the Class A rates apply in every case.

What does this mean for employers?

The percentage increase is small, but it will raise employment costs across a workforce. An employee earning €40,000 a year and subject to the standard Class A employer rate would create an additional employer PRSI cost of around €60 over a full year at the higher rate.

The effect will be greater for employers with larger workforces and should be considered alongside other payroll and workforce costs. Employees who pay PRSI will also see a small increase in deductions from affected pay dates.

How can employers prepare?

1. Check payroll updates: confirm that payroll software will apply the new rates from 1 October 2026. Install and test any update before the first affected payroll run.
2. Review employee classifications: check that employees are assigned to the correct PRSI class and that the appropriate earnings thresholds and credits are being applied.
3. Plan for the additional cost: update payroll forecasts and budgets to reflect the higher employer contribution rates.
4. Brief payroll teams and providers: make sure internal teams and external payroll providers know when the change takes effect and who is responsible for checking the first affected payroll.
5. Communicate clearly with employees: where appropriate, explain that any increase in deductions results from a statutory rate change, rather than a company decision.

Key PRSI changes from 1 October 2026

How Saffery can help

Our payroll and employment tax specialists can help you understand how the changes may affect your organisation, review workforce costs and check that payroll processes are ready for the new rates.

If you’d like to discuss the changes, please get in touch with a member of the Saffery Ireland team.