:format(webp)/f/122463/640x427/e19b776efd/payroll-services.jpeg)
Payroll Update: PRSI increase now in effect – what it means for your business
As of 1st October 2025, the latest PRSI (Pay Related Social Insurance) increase has officially taken effect. Rates have risen by 0.1% across the board, following on from the 2024 rise, and this is just one in a series of scheduled increases continuing through to 2028.
While most payroll software will have updated automatically, this change still warrants attention. For many employers, even a small rise can have a notable impact on budgets, contracts, and employee sentiment.
Planning beyond the payslip
If ifac manage your payroll, you do not need to take any action; the new PRSI rates have been automatically applied since 1st October 2025.
If you handle payroll budgeting internally, we recommend:
Updating cost forecasts to include the PRSI increase
Factoring in Auto Enrolment employer contributions once they begin
Building a small contingency into wage budgets for expected PRSI and pension contribution increases over the next few years.
:format(webp)/f/122463/4896x3264/7f0a02d4af/increase-in-prsi-rates-in-ireland.jpg)
What does a 0.1% increase really mean?
While the change may seem small, it does increase the cost of employing staff and should be reflected in your year-end and 2026 payroll planning.
The standard rate has risen from 11.15% to 11.25%
The lower rate has been increased from 8.9% to 9%
For an employee earning €45,000 annually, the 0.1% increase adds approximately €45 to the annual Employer PRSI cost. For a team of 10 employees on similar salaries, that is roughly €450 extra per year.
This may not seem significant, but when combined with other upcoming changes, with Auto Enrolment beginning 1st January 2026, total employment costs will rise further. Employers must make pension contributions alongside employee deductions, so it is essential to plan for both.
On the employee side, higher PRSI contributions mean a slight reduction in take-home pay, which can affect morale and retention, particularly when combined with rising living costs. Transparent communication can go a long way in maintaining trust and engagement during such transitions.
:format(webp)/f/122463/1000x667/aff62e00e0/auto_enrolment_ifac_payroll.jpg)
Looking ahead
Between the PRSI rate change and the upcoming Auto Enrolment scheme, employment costs are set to rise gradually. These changes are manageable with some planning, but awareness now will make next year's budgeting smoother.
If you’d like a clear picture of what the October increase means for your business and your team, contact your payroll advisor or reach out to your local ifac office. We’ll help you assess the costs, model scenarios, and prepare confidently for what’s next.
Download Guide
Our HR & Payroll Services team are on-hand to ensure you meet your employer obligations. Find out more about our services and how they can benefit your business.
:format(webp)/f/122463/968x820/3fa5d919bf/mary_mcdonagh.jpg)