Could be seen as a disappointing Budget in relation to the support of employers faced with increased payroll costs.
While there was some sectoral support of businesses in the reduction of the VAT rate in areas of hospitality and hairdressing - the Budget did not introduce any measures which would help to alleviate the pressures on payroll costs for employers. Â
Employers and Employees already hit with increase in employer (ER) and employee (EE) PRSI charge of 0.1% since 1 October 2025 also face a further increase of 0.15% in October 2026. This will bring Employer PRSI contribution to 11.40% in Class A.
While an increase in National Minimum Wage from €13.50 per hour to €14.15 per hour from 1 January 2026 is a welcome news for employees, from an employer side, it'll also add to payroll costs.
Introduction of Auto Enrolment on 1 January 2026 also increases payroll costs as employer contribution for eligible employees will be 1.5% of Gross Pay.
Given that there was no increase in tax bands and the removal of the cost-of-living relief measures, employees may put pressure on employers to increase pay.
While all the above are State introduced increases to payroll costs support for business facing these increases did not form part of Budget offering.
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Even those sectors which will benefit from the reduction in VAT rate will have to wait until 1 July 2026 before the benefit will be felt while payroll costs will increase from 1 January 2026.
