Irish Budget 2027: What Hotels Need to Know

Budget 2027 raises hotel wage costs from 1 January 2027. The National Minimum Wage rises by 79 cent to €14.94 an hour, and the weekly threshold for the higher rate of employer PRSI rises from €552 to €600, so full-time minimum-wage employees stay on the lower rate. Hospitality VAT is unchanged, and a €15 million scheme for rural pubs is still being designed. The priority for hotels is to rebuild the Q1 2027 payroll forecast before January, and to roster with the new €600 PRSI line in mind.

What Changed for Hotels in Budget 2027?

Budget 2027 was announced on 6 October 2026. For hotels, it comes down to three things:

• Wage costs rise. The minimum wage goes up by about 5.6% from 1 January, and the age-based rates for younger employees rise in line with it.
• Employer PRSI relief, with a catch. The higher €600 threshold softens the increase, but in any week an employee's pay goes over €600, the higher rate applies to all of that week's pay.
• Little else is aimed at hotels. VAT on food and catering stays at 9%, accommodation stays at 13.5%, and the new €15 million support scheme is for rural pubs.

How Much Is the Minimum Wage Rising in 2027? 

The National Minimum Wage rises from €14.15 to €14.94 an hour from 1 January 2027, an increase of 79 cent, or about 5.6%. The Government accepted the Low Pay Commission's recommendation in full. The rate applies to employees aged 20 and over.

Employees under 20 can still be paid age-based rates, set as a percentage of the full rate. From 1 January 2027 these are €13.45 an hour at age 19 (90%), €11.95 at age 18 (80%) and €10.46 under 18 (70%).

A full-time employee on 39 hours a week will earn about €30,298 a year, up from €28,696.

That is €1,602 more per person, before employer PRSI and pension contributions.

On the employee side, the 2% USC band now extends to €30,300, so a full-time minimum-wage employee stays within it.

What Is Changing With Employer PRSI? 

From 1 January 2027, the weekly earnings threshold for the higher rate of employer PRSI rises from €552 to €600. Where an employee earns €600 or less in a week, the employer pays the lower rate, currently 9.15%. Where they earn more, the higher rate of 11.40% applies to all of that week's earnings, not just the part above €600. 

The change keeps full-time employees on the new minimum wage on the lower rate: 39 hours at €14.94 comes to €582.66 a week. Had the threshold stayed at €552, the employer would pay about €680 a year more in PRSI for each of those employees, which is where the widely quoted saving of €650 to €700 per eligible employee comes from. It softens the wage increase, but it does not cancel it out. 

The PRSI roadmap, legislated separately from the Budget, also continues. Class A rates rose by 0.15 percentage points on 1 October 2026, taking employer PRSI to 9.15% and 11.40%, and rise by another 0.15 points on 1 October 2027, to 9.30% and 11.55%. 

Why Does the €600 PRSI Line Matter for Rostering? 

Because the higher rate applies to the whole week's pay, a few extra hours can cost more than the hours themselves. At €14.94 an hour, basic pay passes €600 at just over 40 hours a week, and overtime, Sunday premiums and other extra payments all count towards the total. 

For example, a minimum-wage employee rostered for 41 hours earns €612.54. The employer then pays PRSI at 11.40% instead of 9.15% on the full amount, an extra €13.78 for that week on top of the extra wages. If that happens every week, it adds over €700 a year per employee, which wipes out the saving the new threshold was meant to deliver. 

That makes the €600 line a rostering decision as much as a payroll one. Employees whose regular weekly pay sits just under €600 are the ones to watch, particularly in weeks with Sunday or extra shifts. 

What Will a Full-Time Minimum-Wage Employee Cost in 2027? 

For one full-time employee on the minimum wage, the total employer cost rises by about €1,817 a year, or 5.7%.

Based on 39 hours a week for 52 weeks, employer PRSI at the lower Class A rate (including the October rate change in each year), and the 1.5% auto-enrolment employer contribution where the employee is enrolled in MyFutureFund. Excludes overtime, premiums and other allowances.

Across a hotel with 40 full-time employees on the minimum wage, that adds up to roughly €73,000 a year, before any knock-on increases for higher-paid roles. 

Is There Any Direct Support for Hospitality? 

Very little in Budget 2027 is aimed at hotels directly. The main hospitality measure is €15 million to help rural pubs stay open. The scheme's rules have not yet been published. Enterprise Minister Peter Burke has said eligibility is likely to be based on turnover, with the aim of opening the scheme to applicants by 1 July 2027. It is not yet clear whether hotel bars will qualify.

There was no change to hospitality VAT. The 9% rate for food and catering services, which returned on 1 July 2026 following Budget 2026 and has no end date, stays in place. Hotel accommodation remains at 13.5% and alcohol at 23%, so packages such as bed and breakfast still need to be split between rates.

How Should Hotels Plan for the 2027 Changes? 

Hotels should rebuild their Q1 2027 wage-cost forecast around the new rates before January, rather than finding the increase in the first payroll run. That means:

• Updating hourly rates for everyone on or near the minimum wage, including the new age-based rates and employees who move into a higher age band during the year.
• Modelling knock-on increases to keep pay differences between roles, for example supervisors paid a set amount above the minimum.
• Identifying employees whose weekly pay sits close to €600, and checking rosters for overtime or Sunday shifts that would push them over.
• Including employer PRSI, auto-enrolment contributions, Sunday premiums and overtime in the forecast, and allowing for the PRSI rate rise on 1 October 2027.
• Tracking payroll as a percentage of revenue every week, so the increase is managed against trading rather than discovered at month end.

Alkimii People supports this planning through Payroll Prediction, which lets managers forecast payroll costs against revenue so wage increases can be planned for, not absorbed by surprise. 

Frequently Asked Questions

What is the Irish minimum wage in 2027?

From 1 January 2027, the National Minimum Wage is €14.94 an hour for employees aged 20 and over, up from €14.15. Age-based rates are €13.45 at 19, €11.95 at 18 and €10.46 under 18.

When do the Budget 2027 changes take effect?

The minimum wage increase and the €600 employer PRSI threshold both apply from 1 January 2027. The next scheduled PRSI rate increase follows on 1 October 2027.

What is the employer PRSI threshold in 2027?

€600 a week, up from €552. Employees earning €600 or less in a week attract the lower employer rate; above that, the higher rate applies to the whole week's earnings.

How much does the higher PRSI threshold save employers?

About €680 a year for each full-time (39-hour) minimum-wage employee, compared with keeping the threshold at €552. Estimates of €650 to €700 per eligible employee are widely quoted.

Did Budget 2027 change hospitality VAT?

No. The 9% rate for food and catering services, in place since 1 July 2026, is unchanged, and hotel accommodation remains at 13.5%.

Can hotels apply for the €15 million pub scheme?

That is not yet known. The scheme is aimed at rural pubs, and its rules, expected to be based on turnover, have not been published.

How can hotels prepare for the 2027 wage changes?

Rebuild the Q1 2027 payroll forecast before January around the €14.94 minimum wage and €600 PRSI threshold, including pay differentials, overtime, Sunday premiums, employer PRSI and pension contributions, and roster with the €600 line in mind.

Hotels forecast payroll by projecting the wage bill against revenue and watching daily variances, so a cost problem is caught as it forms rather than explained at period end. 

About Alkimii People

Alkimii People brings HR, rostering, time and attendance, and payroll forecasting into one platform built for hospitality. Its Payroll Prediction feature lets managers forecast payroll costs against revenue and monitor pay as a percentage of takings, so wage changes like the 2027 minimum wage increase can be planned for in advance rather than absorbed after the fact.

Find out more at www.alkimii.com/alkimii-people

Budget 2027 lifts Ireland's minimum wage to €14.94 and the employer PRSI threshold to €600 from January. Here is what it means for hotel payroll.

Disclaimer

This article is a general summary of Budget 2027 measures relevant to hotels and is not tax, legal or financial advice. Figures reflect the measures announced on 6 October 2026. Some still need to be given legal effect through the Finance Bill or a ministerial order, and may change.

For the official and most current detail, see the Government's Your Guide to Budget 2027 on gov.ie and the Citizens Information summary of Budget 2027.