The employee rate moved from 4.20% to 4.35%. Another step follows in a year. The increases were legislated in 2024 and have nothing to do with Tuesday’s Budget.
If your October payslip looks slightly lighter, this is why. Employee PRSI rose from 4.20% to 4.35% on 1 October.
This was decided in 2024
The increase is part of a roadmap enacted under the Social Welfare (Miscellaneous Provisions) Act 2024. All PRSI rates rise by 0.1 of a percentage point in October 2024, a further 0.1 in October 2025, 0.15 in October 2026, 0.15 in October 2027, and 0.2 in October 2028. The purpose is to fund the Social Insurance Fund as the population ages and the State pension age stays at 66.
So the employee rate reaches 4.50% on 1 October 2027 and 4.70% in October 2028. Employer rates rise by the same steps. None of this requires a Budget decision, and none of it can be reversed by Tuesday’s announcements without new legislation.
What it means in practice
PRSI is charged on gross pay above €352 a week. On €40,000 a year, the 0.15 point rise costs €60. On €60,000 it costs €90. The self-employed pay Class S PRSI at a rate that rises on the same schedule.
For most people the effect is dwarfed by October’s energy increases, which is partly why it has drawn so little attention. But it compounds. By October 2028, the employee rate will be half a percentage point higher than it was in 2023, worth around €250 a year on average earnings.
Why it matters on Budget day
When the Government describes a tax package worth a certain amount per worker on Tuesday, the PRSI increase will not be in that calculation. Any income tax gain should be read net of it. A €500 benefit from band and credit changes becomes roughly €425 once the PRSI rise is counted.
It is also a reminder of the trade-off the roadmap represents. Higher PRSI contributions are the price of keeping the pension age at 66 and the Social Insurance Fund solvent into the 2030s, a choice made after the Pensions Commission reported in 2021.
