Employment tax - Budget 2027

Enhanced Reporting Requirements (ERR)

Since 1 January 2024, employers are required to report details of certain expenses and benefits made to employees and directors. The reportable benefits are the payment of travel and subsistence expenses, the small benefit exemption and the remote working daily allowance.

The current position is that travel and subsistence expenses, the small benefit exemption and the remote working daily allowance, must be reported to Revenue "on or before" the payment / benefit is provided.

The Cost of Business Advisory Forum recently made a number of recommendations to Government, including changes to the ERR.

From 1 January 2027, employers can choose to continue to report ‘on or before’ when the payments are made, or alternatively they can report the information by the 14th of the month following the month in which the reportable benefit is provided to the employee. This relaxation should provide additional flexibility for payroll teams.

PRSI rate increase

Since 1 October 2026, the PRSI rates (employee and employer) increased by 0.15% for all PRSI classes.  For example, the Class A PRSI rates are now 4.35% for employees and 11.40% for employers.

From 1 October 2027, the PRSI rates (employee and employer) are set to increase by 0.15% for all PRSI classes. 

Employer PRSI threshold increase

To support SMEs and help offset the impact of the increase in the National Minimum Wage, the Government has announced that the employer PRSI threshold will increase from €552 to €600 per week with effect from 1 January 2027.

Cycle to Work and TaxSaver scheme

The Government will initiate a review of the Cycle to Work scheme in 2027 to identify ways to boost uptake among all workers. The Minister for Transport will initiate a comprehensive review of the TaxSaver scheme for commuters. Working patterns have changed and the scheme should reflect that.

If a satisfactory model can be developed, the same tax treatment as under the current scheme will apply.

Minimum wage increase

Although not a tax measure, the minimum wage will be increased from €14.15 to €14.94 per hour from 1 January 2027.

Nurturing Skills Learner Fund

The Nurturing Skills Learner Fund provides rebates of relevant third level course fees to those who remain in childcare employment for a continuous six months after they complete the relevant third level course.

Rebates paid to qualifying students under the Nurturing Skills Learner Fund are being made tax exempt.