The Budget 2027 announcements include a number of changes that will affect payroll and employee deductions from 2027.
This article outlines the key changes to Tax Credits, Standard Rate Tax Bands, USC, the National Minimum Wage, PRSI and Enhanced Reporting Requirements (ERR), as well as updates to the Cycle to Work and TaxSaver schemes.
Tax Credits
The personal, employee and earned income tax credits will each increase by €125.
Standard Rate Tax Bands
The standard rate tax bands will increase by €2,500.
Universal Social Charge (USC)
The 2% USC band will increase by €1,600, bringing the band to €30,300.
National Minimum Wage
The minimum wage will increase by €0.79, bringing it to €14.94 per hour.
This change will take effect from 1 January 2027.
PRSI Rates
A further increase of 0.15% in PRSI contribution rates for both employers and employees will apply from 1 October 2027.
This increase was previously announced and provided for under the Social Welfare (Miscellaneous Provisions) Act 2024.
Employer PRSI Threshold
The employer PRSI threshold will increase from €552 to €600 per week.
Employees earning up to €600 per week will therefore attract the lower employer PRSI rate.
Enhanced Reporting Requirements (ERR)
From 2027, the time period for returning information under Enhanced Reporting Requirements (ERR) will be amended.
Taxpayers will have the option to:
- Continue to report 'on or before' certain tax-free payments are made; or
- Report the information by the 14th of the month following the income tax month in which the reportable benefit is provided to the employee.
Cycle to Work Scheme and TaxSaver Scheme
The Minister has announced reviews of both the Cycle to Work Scheme and TaxSaver Scheme.
Cycle to Work Scheme
The Cycle to Work Scheme will be reviewed in 2027 to identify measures that could increase participation.
TaxSaver Scheme
The TaxSaver Scheme will undergo a comprehensive review to ensure that it remains aligned with evolving commuter and working patterns.
Summary
The key payroll changes announced for Budget 2027 are:
| Area | Change | Effective Date |
|---|---|---|
| Tax Credits | Increase of €125 to personal, employee and earned income tax credits | 2027 |
| Standard Rate Tax Bands | Increase of €2,500 | 2027 |
| USC | 2% band increases to €30,300 | 2027 |
| Minimum Wage | Increase to €14.94 per hour | 1 January 2027 |
| PRSI | Employer and employee rates increase by 0.15% | 1 October 2027 |
| Employer PRSI Threshold | Increases from €552 to €600 per week | 2027 |