Budget 2026 Ireland – Tax Changes for PAYE Workers
Every tax change announced in October 2025, what it means for your take-home pay, and how much better (or worse) off you are in 2026
Every tax change announced in October 2025, what it means for your take-home pay, and how much better (or worse) off you are in 2026
Budget 2026 was announced by the Minister for Finance in October 2025 and took effect from 1 January 2026. Unusually, it was a standstill budget for income tax: after several years of indexing bands and credits, the government left the standard rate cut-off, the 20%/40% rates and the main tax credits all unchanged. For most PAYE workers, take-home pay in 2026 is therefore almost identical to 2025.
What actually changed for workers:
What did not change: the standard rate cut-off stayed at €44,000 (single); the Personal and PAYE credits stayed at €2,000 each (€4,000 combined); and the USC rates (0.5%, 2%, 3%, 8%) and the €70,044 threshold for the 8% rate were all unchanged.
Net result for most workers: take-home pay in 2026 is essentially flat versus 2025. The small USC band saving (~€13) is broadly offset by the scheduled PRSI step later in the year, so any change in your actual net pay is far more likely to come from a salary rise than from Budget 2026 itself.
This was the only income-tax-side change in Budget 2026. The upper limit of the 2% USC band increased by €1,318, so income in that range which would have been charged 3% USC is now charged 2%.
The 0.5% band (€0–€12,012), the 3% band and the 8% threshold (above €70,044) were all unchanged in Budget 2026.
Employee Class A PRSI is scheduled to rise by 0.15 percentage points, from 4.2% to 4.35%, from 1 October 2026 — part of a pre-announced roadmap to fund the State pension. For most of 2026 the rate is 4.2%; the higher rate applies only to the final quarter.
Because the increase only takes effect from October, the impact on 2026 take-home is roughly a quarter of those figures; the full annual cost lands in 2027.
A common point of confusion: the standard rate cut-off did not change in Budget 2026. It remained at €44,000 for a single person. The widely-remembered rise from €42,000 to €44,000 came in the previous budget and took effect in 2025 — it is not a Budget 2026 measure.
Budget 2026 did not index the main credits, so they stayed at their 2025 levels:
The National Minimum Wage rose by 65 cent per hour to €14.15 from 1 January 2026. For a full-time worker on 39 hours per week, this equates to:
Because the cut-off, rates and credits were all held flat, the only two moving parts year-on-year are the USC band widening (a small saving) and the headline PRSI rate (4.1% in 2025 rising to 4.2% in 2026 on this site's basis). The net effect is marginal at every salary level.
| Gross Salary | 2025 Net (est.) | 2026 Net | Change (yr) | Change (mo) | Why |
|---|---|---|---|---|---|
| €30,000 | €26,324 | €26,307 | −€17 | −€1.40 | ~€13 USC saving slightly outweighed by the small PRSI step |
| €35,000 | €29,969 | €29,947 | −€22 | −€1.82 | USC widening saves ~€13; PRSI on €35k costs a little more |
| €50,000 | €39,704 | €39,667 | −€37 | −€3.07 | Higher salary means the small PRSI rise edges out the USC saving |
| €70,000 | €50,284 | €50,227 | −€57 | −€4.73 | Same pattern, scaled up with income |
Note: 2025 figures use 2025 parameters (€44,000 cut-off, €4,000 credits, 4.1% PRSI, €27,382 USC 2% cap); 2026 figures use the same cut-off and credits with 4.2% PRSI and the €28,700 USC cap. Figures are rounded estimates for a single PAYE employee and exclude the late-2026 step to 4.35% PRSI, which adds a few more euro for the final quarter.
The honest takeaway: Budget 2026 barely moved take-home pay. Across the board the change is a euro or two a month either way. If your net pay changes noticeably in 2026, it will be because of a pay rise, a pension change or a new tax credit you have claimed — not because of this budget.
The rise to 4.35% is part of a structured multi-year plan, with each step taking effect on 1 October of its year rather than 1 January. The confirmed trajectory for the employee Class A rate is:
| Effective date | Employee PRSI Rate | Change |
|---|---|---|
| Before 1 Oct 2024 | 4.00% | — |
| 1 October 2024 | 4.10% | +0.10% |
| 1 October 2025 | 4.20% | +0.10% |
| 1 October 2026 | 4.35% | +0.15% |
| 2027–2028 (planned) | further small rises | roadmap continues |
The stated purpose is to shore up the Social Insurance Fund, which pays for the State pension, illness benefit, maternity benefit and other social welfare payments. With an ageing population, the fund is projected to face a deficit without additional contributions.
For workers: the 0.15-point step to 4.35% costs about €75/year per €50,000 of salary once fully in effect. Cumulatively, the move from 4.0% (pre-October 2024) to 4.35% adds roughly €245/year for a €70,000 earner; if the roadmap continues toward the higher rates flagged for later years, that gap will widen further.
The 2% USC band widening is a small but consistent annual Budget measure. Widening the band rather than reducing rates keeps more income in the lower bracket as wages rise — effectively preventing bracket creep where inflation pushes people into higher tax bands without real income gains.
The 2026 change in context:
| Year | USC 2% Band Upper Limit | Increase |
|---|---|---|
| 2023 | €22,920 | — |
| 2024 | €25,760 | +€2,840 |
| 2025 | €27,382 | +€1,622 |
| 2026 | €28,700 | +€1,318 |
While the 2026 widening is smaller than previous years, it continues the trend of keeping the 3% threshold roughly in line with average wage growth. The 8% USC threshold (€70,044) and the 0.5% band limit (€12,012) were both left unchanged in Budget 2026.
The Renters Tax Credit continues at €1,000 for a single person and €2,000 for jointly-assessed couples in 2026. To claim it, you must register your tenancy with the Residential Tenancies Board (RTB) and apply via Revenue's myAccount. The credit is a direct reduction in your tax bill — not a deduction from income — so it saves the full €1,000 regardless of what rate you pay.
This credit applies where one spouse or civil partner stays home to care for dependent children or other dependants. It remained at €1,950 in 2026, unchanged from 2025.
Full-time minimum wage workers (39 hrs/week, 52 weeks) now earn approximately €28,696 gross per year. Their take-home pay after PAYE, USC and PRSI is approximately €25,358 — an effective rate of around 12%. Because the rise to €14.15 keeps a full-time minimum-wage income just under the widened €28,700 USC 2% ceiling, these workers stay out of the 3% USC band.
Employer PRSI also increased alongside employee PRSI in Budget 2026. While this does not directly affect your take-home pay, it increases the overall cost of employment — something that can affect future wage negotiations and benefit packages.
Budget 2026 was largely a standstill budget for income tax — the cut-off (€44,000), the 20%/40% rates and the main credits (€2,000 each) were all left unchanged. The notable changes were: the USC 2% band widened from €27,382 to €28,700; the minimum wage rose to €14.15/hour; and employee PRSI is scheduled to rise from 4.2% to 4.35% from 1 October 2026. The Rent Tax Credit stayed at €1,000.
No. The Personal Tax Credit and the PAYE (Employee) Tax Credit both remained at €2,000 each (€4,000 combined), unchanged from 2025. Budget 2026 did not index credits or bands — a departure from the previous several budgets.
No. The standard rate cut-off stayed at €44,000 for a single person. The rise from €42,000 to €44,000 happened in the previous budget (effective 2025), not Budget 2026. The first €44,000 is taxed at 20% and the balance at 40%.
Yes, but only from 1 October 2026, when employee PRSI rises from 4.2% to 4.35% as part of a multi-year roadmap. For most of 2026 the rate is 4.2%. The 0.15-point rise costs a €50,000 earner about €75/year once fully in effect.
The upper limit of the 2% USC band was widened from €27,382 to €28,700 — saving about €13/year for anyone earning above €28,700. The 0.5%, 3% and 8% rates and thresholds were unchanged.
Yes. The national minimum wage increased by €0.65 to €14.15 per hour, effective 1 January 2026. A full-time worker on minimum wage now earns approximately €28,696 gross per year.
Use our salary calculator to see exactly how Budget 2026 changes affect your specific salary — including the full PAYE, USC and PRSI breakdown with all 2026 figures applied.