From 1 October 2026, PRSI rates are going up again. Employees on the standard Class A1 rate move from 4.20% to 4.35%, while employers move from 11.25% to 11.40%. This is the third annual increase under the phased schedule announced in Budget 2024 tostrengthen the State Pension system.

The increase is small, but it applies to every payroll you run from October onwards. It's worth making sure your systems, budgets and staff are ready.

The New Rates at a Glance

Employers pay the reduced rate of 9.15% on weekly earnings up to €552, and 11.40% on weekly earnings above €552. The €552 threshold ensures that employers continue to pay the reduced rate for employees working up to a 39-hour week on the national minimum wage.

What This Means for Your Costs

For most businesses, the extra cost is modest but adds up across a team:

• An employee earning €700 a week costs you about €1.05 more per week in employer PRSI, or roughly €55 a year.
• A team of 10 on similar pay adds around €546 ayear to your payroll bill.
• A full-time employee on minimum wage stays on the reduced rate and costs about €0.83 more per week.

For hospitality, retail and salon businesses with large teams, the increase comes on top of this year's minimum wage rise and the start of pension auto-enrolment. It's worth factoring into your pricing and cash flow for the months ahead.

What Changes for Your Employees

Employees earning more than €352 a week will see a slightly higher PRSI deduction ontheir October payslips. Those earning €352 a week or less remain exempt and are not affected by this change. The PRSI credit for earnings between €352 and €424 per week continues, subject to the €12 weekly maximum.

Practical Steps for Business Owners

• Check your payroll software. Make sure the new rates are in place before your first pay date in October.
• Watch the timing of one-off payments. PRSI is charged at the rate in force on the date a payment is made, regardless of when the income was earned. A September bonus paid in October will be charged at the new rate.
• Update your budgets. Review payroll cost forecasts for the final quarter of 2026 and full-year 2027.
• Give your staff a heads-up. A short note explaining the small change in their payslips can save questions later.
• Plan ahead. Further increases are scheduled under the Government's PRSI roadmap, so this won't be the last one.

How M.A. Whately & Co. Can Help

Our payroll team can check that your PRSI rates are applied correctly from 1 October 2026, and review your employee pay bands against the €552 threshold. We can also update your cash-flow forecasts to reflect the new costs.

If you'd liketo talk through how the change affects your business, book a quick chat or contact our team today.