Legislation changes for the 2026 tax year

Summary

Details of the 2026 tax year legislation changes effective from 1 January 2026 when using Sage Payroll.

Description

The Minister for Finance, Paschal Donohoe, announced these measures in Budget 2026 on 7 October 2025. 

For help running your 2025 year end, visit our Payroll year end hub.

 NOTE: To view a summary of Budget 2026, go to revenue.ie

Changes from 1 January 2026

Universal Social Charge (USC)

The 2% USC rate band increases by €1,318, raising the ceiling from €27,382 to €28,700. This ensures full-time minimum-wage earners remain outside the higher USC rate bands.

2026 € Rate
Income up to 12,012.00 0.5%
Income from 12,012.01 to 28,700.00 2%
Income from 28,700.01 to 70,044.00 3%
Income above 70,044.00 8%

Reduced USC rates continue to apply for:

  • Individuals aged 70+ with income up to €60,000
  • Full medical card holders under 70 earning up to €60,000
  • These reduced rates remain in place until 31 December 2027

National minimum wage (NMW)

The NMW rate increases by €0.65 from €13.50 to €14.15 per hour. This affects PRSI thresholds and the 2% USC band ceiling.

Auto-enrolment retirement savings scheme

Auto-enrolment (My Future Fund) begins on 1 January 2026. Employers must automatically enrol eligible employees. NAERSA manages enrolment, contributions, and opt-out requests.

To find out more, visit our Auto enrolment hub.

Changes from 1 October 2026

PRSI threshold increase

From 1 October 2026, both employer and employee PRSI contribution rates increase by 0.15%. The threshold rises from €527 to €552 per week. 

No changes for 2026

Pay as you earn (PAYE)

Tax rates remain unchanged for 2026.

▼ Tax rates and tax bands

Personal circumstances

 2026 €
Single or widowed, or surviving civil partner, without a qualifying child 44,000 @ 20% Balance @ 40%
Single or widowed, or surviving civil partner, qualifying for single person child carer credit 48,000 @ 20% Balance @ 40%
Married or in a civil partnership, one spouse or civil partner with income 53,000 @ 20% Balance @ 40%
Married or in a civil partnership, both spouses or civil partners with income 53,000 @ 20% with increase of 35,000 max. Balance @ 40%
▼ Tax credits
Tax credit 2026 €
Single person 2,000
Married or in a civil partnership 4,000
Employee Tax Credit 2,000
Earned Income Tax Credit 2,000
Widowed person or surviving civil partner (without qualifying child) 1,900
Incapacitated Child Credit 3,800
Blind Tax Credit
Single person
Married or in a civil partnership:
  • one spouse or civil partner blind 
  • both spouses or civil partners blind
 1,950

1,950
3,900
Dependent relative 305
Home carer tax credit 1,950

 

Statutory Sick Pay

  • Current status: Employers must give employees five statutory sick days in 2025
  • Future plans: The planned increases to seven days in 2025 and 10 days in 2026 have been postponed
  • Reason for delay: The government is reviewing the scheme’s impact before confirming the next phase

Small benefit exemption

No announced changes for 2026. The 2025 rules remain in place:

  • Up to €1,500 in non-cash benefits
  • Up to five benefits per employee each year

Solution Properties

Solution ID
251114162042793
Last Modified Date
Wed Dec 03 15:03:01 UTC 2025
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