Introduction
On 1 October 2025, all PRSI (Pay Related Social Insurance) contribution rates in Ireland will increase by 0.10 percentage points for employees, employers, and the self-employed.
This is the second step in a multi-year schedule of gradual PRSI hikes, designed to bolster the Social Insurance Fund and support long-term social welfare obligations.
In this article, we explain the background to the changes, the detailed new rates for key classes, and who will be affected.
This update is already built into the Parolla system and will be automatically applied to payruns with payment dates on or after 1 October 2025. If you have already created any October–December 2025 payruns, you will need to select Rebuild Payslips from the Actions drop-down menu.
What Is PRSI? (Background)
PRSI is Ireland’s social insurance contribution system. Most workers, employers, and self-employed individuals pay PRSI contributions, which fund:
- State pensions
- Illness, maternity, and unemployment benefits
- Other social protection schemes
PRSI is organised into classes (Class A, Class S, etc.) depending on whether you are an employee, self-employed, your income level, or your type of work.
The Social Welfare (Miscellaneous Provisions) Act 2024 set out a five-year plan of incremental increases (October 2024–2028) to help sustain the Social Insurance Fund and manage pressures caused by an ageing population.
- The first increase took effect on 1 October 2024, raising rates by 0.10 percentage points across most PRSI classes.
- The October 2025 increase is the next step in this planned path.
What Changes on 1 October 2025?
Key Adjustments
From 1 October 2025:
- Every PRSI contribution rate — employee, employer, and self-employed — rises by 0.10 percentage points.
- Class A (covering most employees):
- Employer rate: 11.15% → 11.25%
- Employee rate: 4.10% → 4.20%
- Self-employed (Class S): Rate increases by 0.10%.
- Thresholds and subclass rates (e.g. for earners at €352 per week) also adjust upwards by 0.10 percentage points.
Comparison Table – Class A
| PRSI Class / Earnings Band | Employee Rate (pre-Oct 2025) | Employee Rate (from 1 Oct 2025) | Employer Rate (pre-Oct 2025) | Employer Rate (from 1 Oct 2025) |
|---|---|---|---|---|
| Class A – most employees (above thresholds) | 4.10% | 4.20% | 11.15% | 11.25% |
| Earners of €352 per week / subclass bands | Lower rates | Each increases by 0.10 pp | Lower rates | Each increases by 0.10 pp |
Note: Some classes (such as Class M and other exempt categories) will remain unaffected.
Who Is Affected & What the Impact Will Be
Employees
- Slight reduction in net take-home pay due to the higher PRSI deduction.
Employers
- Higher payroll costs, as employer contributions rise. This should be built into budget forecasts.
Self-Employed
- Self-employed and certain directors or contractors under Class S will also pay more.
Lower-Paid / Exempt Workers
- Those earning less than €352 per week in exempt classes remain unaffected.
Financial Impact – Broad Estimate
- The increase is modest.
- Example: On a salary of €40,000 per year, the 0.10% increase means an additional €40 annually for the employee, with a similar extra burden for the employer.
- While small in isolation, the cumulative effect of further increases in 2026, 2027, and 2028 will be more noticeable.
What Should You Do? (Tips & Recommendations)
1. Payroll Update
- The new PRSI rates are already applied in Parolla to payruns with payment dates from 1 October 2025 onwards.
- If you created October–December 2025 payruns before 26 September 2025, you should click Rebuild Payrun / Reload Payslip Template.
2. Communicate to Employees & Contractors
- Let staff know about the changes, the reason behind them, and the expected impact (slightly lower net pay).
3. Budget for Higher Costs (Employers)
- Factor in the additional employer contribution into wage budgets and forecasts.
4. Review Contracts & Packages
- For contractors or roles where net pay is critical, consider whether remuneration packages need adjustment.
5. Monitor Future Increases
- This is the second step in a five-year plan:
- 2024: +0.10%
- 2025: +0.10%
- 2026: +0.15%
- 2027: +0.15%
- 2028: +0.20%
Staying prepared will prevent last-minute adjustments in payroll and employee communications.
Final Thoughts
The PRSI increase from 1 October 2025 is small but important. It affects employees, employers, and the self-employed alike, as part of Ireland’s wider plan to safeguard the Social Insurance Fund and ensure future sustainability of social welfare payments.
With Parolla, these changes are applied automatically, keeping your payroll compliant and up to date. Employers should still communicate, budget, and plan for these incremental rises as they continue through 2028.