We’re now one week into 2026, which means the budget changes for 2026 have started to kick in. For hospitality, October’s budget provided both relief and disappointment: while it was not the budget many businesses were hoping for, it did promise some respite for the hospitality industry with the VAT cut that has been long-hoped for. Here are the changes you need to be aware of now that 2026 is under way.
Minimum Wage
As of January 1st, the National Minimum Wage in Ireland has risen to €14.15 an hour, a 65c increase for those aged 20+. For those aged 19, it is €12.74/hr. For those aged 18, it is €11.32/hr. For workers that are under 18, the NMW is now €9.91.
This will bring an average full time worker’s weekly pay from €526 to €551.85, an annual salary of €28,696. This can add up for hospitality operators, with payroll being one of the biggest costs for the sector.
VAT Rate Cut
After a lot of hope and campaigning, the Government announced in the budget that the VAT rate for services such as food, drink and salons will return to the Covid-era rate of 9%, down from 13.5%. This will not apply to hotel stays and other similar tourist services.
The VAT reduction will come into effect in July of this year.
Auto-enrolment
Auto-enrolment has officially kicked in, which will further add to payroll costs. For anyone over 23 earning upwards of €20k, employers and employees will have to pay in 1.5% of pensionable pay each. This will increase incrementally over the next ten years, until contributions reach 6% in ten years time.
If a hospitality business processes tips and service charges through payroll, this will also contribute to pensionable pay. This not only increases the contributions you and your staff pay, it also increases net pay for employees who may not yet meet the €20k threshold, pushing them over the edge.
