Payroll changes announced in Budget 2025 will directly impact employers based in Ireland and their payroll processes. Staying ahead of these updates is crucial for Revenue compliance and effective payroll management. 

In this ‘must read’ for employers in Ireland (including international companies with a presence here), we break down the key payroll changes you need to know as we enter the new year:

National Minimum Wage (NMW) Increase

Firstly, from 1st January 2025, the National Minimum Wage for people over 20 years of age will increase by €0.80 per hour, rising to €13.50 per hour. 

What This Means for Employers: Businesses employing minimum-wage employees must update their payroll systems to reflect this change and ensure accurate payment processing.

PAYE and USC Changes

Standard Rate Cut-Off Point Increase 

The income tax standard rate threshold for the 40% tax band will increase from 1st January 2025, bringing the entry point from €42,000 to €44,000.

Personal Tax Credits

• Personal, employee, and earned income tax credits will each rise by €125. 

Universal Social Charge (USC) Updates

• The 2% USC rate threshold will increase to €27,382 to align with the new National Minimum Wage (NMW) and ensure that employees on NMW and working 39 hours and below will not be subject to USC. 
• The 4% USC rate will be reduced to 3%, offering relief to middle-income earners, specifically those earning between €27,382 and €70,044. 

What This Means for Employers: Payroll systems must be updated to ensure these new thresholds and rates are correctly implemented.

Maternity, Paternity, Adoptive, and Parent’s Leave Benefits

From 1^st January, there will be a €15 increase in Maternity Benefit, Paternity Benefit, Adoptive Benefit and Parent’s Benefit.

What This Means for Employers: Ensure employees are aware of the increased statutory benefit and review your current maternity, paternity, adoptive, and parent’s leave policies and processes. 

Other Key Changes to be aware of:

• Although in place since 1 January 2024, employers should be aware of Enhanced Reporting Requirements (ERR) impacting any payments or gifting to employees outside of their standard salary, such as: Small Exemption Benefits (typically vouchers), remote working daily allowance, travel, and subsistence.  Read more about ERR on Revenue.ie.
• The much anticipated Pension Auto Enrolment scheme is now due to begin 30^th September 2025, which will undoubtedly mean payroll changes. 
• BIK changes – Although not covered in this article, Budget 2025 did introduce minor BIK changes on employer-provided vehicles, best reviewed by a tax expert. 
• Finally, Statutory Sick Pay (SSP) paid sick days are due to increase to 7 days in 2025, however as yet this is not confirmed. Employers should monitor government announcements on SSP changes for 2025 and 2026. 

Note: According to citizens information, Government of Ireland is awaiting results from an ESRI review on SSP before making final decision on 2025 and 2026 days. Read more on the latest SSP update from Citizens Information. 

How Ormsby & Rhodes Can Help Your Business Navigate Payroll 2025 & Beyond

At Ormsby & Rhodes, one of the longest established accountancy firms in Ireland, we specialise in delivering expert payroll solutions tailored to your business needs. Whether you are an SME, larger enterprise, or international group structure with a presence in Ireland, our experts are ready to support your payroll, ensuring compliance with all regulatory requirements.  

Stay Ahead of Payroll Changes in 2025 Arrange a consultation with our experts by emailing info@ormsby-rhodes.ie and let us help you maintain seamless payroll in 2025 and beyond.