2026 Budget - Employer Summary

Pay As You Earn (PAYE)

• There is no change to tax rates for 2026 - the standard rate will remain at 20% and the higher rate at 40%
  
  
• There is no change to the Standard Rate Cut Off Point (SRCOP) 
  
  
• The Personal Tax Credit remains the same at €2,000
  
  
• The Employee Tax Credit remains the same at €2,000
  

Earned Income Tax Credit

• The Earned Income Credit remains the same at €2,000

Universal Social Charge (USC)

• Exemption threshold remains at €13,000
  
  
• The 2% USC rate band has been increased by €1,318, from €27,382 to €28,700
  
  
• For 2026, USC will apply at the following rates for those earning in excess of €13,000:

0.5% - Income up to €12,012

2% - Income from €12,012.01 tp €28,700

3% - Income from €28,700 to €70,044

8% - Income above €70,044

• Medical card holders and individuals aged 70 years and older whose aggregate income does not exceed €60,000 will pay a maximum rate of 2% has been extended to 2027
  
  
• The emergency rate of USC remains at 8%.
  
  
• Non-PAYE income in excess of €100,000 will continue to be subject to USC at 11%.

National Minimum Wage

• The National Minimum Wage will increase by €0.65 from €13.50 to €14.15 per hour from January 1st 2026.

Pay Related Social Insurance (PRSI)

• All PRSI contribution rates remain the same

Social Welfare

• There will be a €10 increase in all weekly Social Welfare payments with effect from January 2025. The maximum personal rate of Illness Benefit will be increased to €254 per week. Maternity Benefit, Parent’s Benefit and Paternity Benefit will be increased to €299 per week.

VAT

• The reduced rate of 9% VAT for the gas and electricity will continue to apply until the 31st Dec 2030.

Extension of BIK Exemption for Electric Vehicles

• The BIK relief for battery electric vehicles continues with a tapering reduction to the vehicle’s Original Market Value (OMV). For BIK purposes, the OMV of an electric vehicle is reduced by €35,000 in 2023, 2024 and 2025, by €30,000 in 2026 (made up of a €20,000 EV-specific reduction plus a €10,000 universal reduction), and by €15,000 in 2027.