Budget 2026
With the new year approaching, it’s important to stay informed about the latest tax changes that may impact you and your payroll. Budget 2026 was recently announced, and it introduces a few notable changes for next year.
Changes to the Standard Rate Cut-Off Points for income tax, as well as to Personal, Employee, and Earned Income Tax Credits, were limited. Budget 2026 focuses on changes to the national minimum wage, USC rate bands, and Benefits-in-Kind (BIKs).
As happens every tax year, Revenue will automatically update employees’ Revenue Payroll Notifications (RPNs) for 2026. In turn, SimplePay will automatically apply these updates to your payroll, ensuring everything stays accurate and compliant.
Noteworthy changes for 2026:
PAYE
There have not been any changes to income tax rates and bands, nor to employee tax credits.
USC
USC information, crucial for payroll, is obtained from RPNs.
On 1 January 2026, the USC exemption threshold will remain unchanged at €13,000, and the 2% USC band will increase by €1,318, from €27,382 to €28,700.
This ensures that employees earning the national minimum wage for up to 39 hours per week will continue to fall outside the top USC rates.
National Minimum Wage
On 1 January 2026, the national minimum wage for people aged 20 and over will increase by €0.65, from €13.50 to €14.15 per hour. This increase is part of the Government’s plan to transition to a national living wage by 2026, and it is intended to help workers earn a fair income.
PRSI
As previously announced, PRSI contribution rates increased by 0.1% on 1 October 2025. This change affects payslips issued after that date.
Benefit-in-Kind for Company Cars
The €10,000 reduction on the Original Market Value (OMV) when calculating BIKs for company cars will remain in 2026. Thereafter, it will decrease to €5,000 in 2027, and €2,500 in 2028; this reduction will no longer be available in 2029.
Additionally, a new vehicle category (A1) will be introduced for zero-emission cars, effective 1 January 2026. The BIK on category A1 cars will be calculated at between 6% and 15% of the car’s OMV, subject to business mileage.
Employers should make sure they use the correct figures when calculating the BIK amounts entered on SimplePay.
SimplePay remains dedicated to guiding you through the complexities of the new tax year while proactively ensuring your continued compliance.
If you have any questions about these changes, SimplePay, or our services, please don’t hesitate to contact our Customer Support team at support@simplepay.cloud.
If you aren’t a SimplePay user yet, but you are interested in simple and efficient payroll software, why not sign up for a free 30-day trial? You can sign up by clicking here.
Take care,
Team SimplePay
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