Ireland | Sep 10, 2023

Income Taxes in Ireland — Decoding the Irish PAYE System

Wondering what PAYE is and the impact it has on how much of your salary ends up in your pocket? This simple and comprehensive guide will bring you the clarity you need, and with a touch of Irish luck, you'll have it all figured out in no time.

Miniature flag of Ireland on top of a pile of Euro banknotes

If you are employed in Ireland, you generally don't have to worry about income taxes. Your employer will automatically deduct all taxes and contributions from your monthly salary and send them over to Revenue, the tax authority in Ireland.

This system is called PAYE, short for "Pay As You Earn". Through PAYE, the paycheck you get is typically your final take-home pay, unless your personal situation changes during the year.

If you're self-employed, you can use the Revenue Online Service (ROS) to file your tax return for the previous year. You can also complete and mail the necessary documents by hand. However, filing online extends the tax deadline from October 31st to mid-November.

1. Income Taxes in Ireland

Taxes are one of life's certainties, and for all its good craic Ireland is no exception when it comes to taxing your hard-earned money. Luckily, there are only three taxes that the Irish government levies on employment income: Income Tax, Universal Social Charge (USC), and Pay Related Social Insurance (PRSI).

Income Tax

Irish income tax is separated into two tax rates. The "standard rate" refers to the part of your income that's taxed at 20%. The "higher rate" is the rest of your income, which is taxed at 40%. The threshold between the standard and higher rates depends on personal circumstances. The table below shows the thresholds for taxpayers who are not married and have no children or other dependents.

Taxable Income Rate Applied
€0 to €40,000 20%
€40,001 or more 40%

Universal Social Charge (USC)

The USC replaced the income levy and health levy back in 2011. Everyone who earns more than €13,000 must make contributions. Depending on your income level, you'll pay between 0.5% to 8% of your income. You can pay at a reduced rate (0.5% to 2%) if you're over 70 years old and make less than €60,000 or if you're a medical card holder who makes under €60,000.

Taxable Income Rate Applied
€0 to €12,012 0.5%
€12,013 to 22,920 2%
€22,921 to €70,044 4.5%
€70,045 or more 8%
Take advantage of our Ireland Tax Calculator to get an accurate estimate of your take-home pay! It accounts for all relevant taxes imposed by the Irish government: income tax, USC, and PRSI.

2. How Are Tax Rates Determined?

Your tax brackets and the exemptions or credits you qualify for are based on your gross income and personal circumstances. If your marital status changes, if you have children or other dependents, or if you start a second job, be sure to update your information on myAccount for Revenue to reassess your taxes and notify your employer.

To log into myAccount and register your personal situation you will need a Personal Public Service Number (PPSN). This is your tax identifier and all taxpayers must have one. If you just moved in, you can apply for a PPSN by contacting the Client Identity Services branch of the Department of Social Protection.

3. What Is Irish Emergency Tax and How to Avoid It?

If you started a new job and haven't provided your employer with the necessary information, your income is subject to emergency tax. The emergency tax rate depends on what information is missing, and you should remedy the situation as soon as possible to avoid paying more than necessary.

  • Missing PPSN: If you haven't provided your PPSN to your employer, your entire income will be taxed at the higher rate of 40%.
  • Unregistered Job: If your job is unregistered with Revenue but your employer has your PPSN, your income is subject to a 20% tax rate up to the limit of your band and a 40% tax rate for all additional income. After four weeks, your entire income is taxed at 40%.

Your employer will typically register your job with Revenue for you, but you can always check or register it yourself using PAYE Services in myAccount. Once this information is ready, your employer can take you off emergency tax and possibly get you a refund.

Not sure if you're paying emergency tax? With our Irish Tax Calculator, earners can estimate their annual taxes — if the estimate is very different from what you've paid, then you might be on emergency tax!

4. An example

Summarising all the above, let's calculate what a person who is not married and has no dependents is expected to pay in taxes for the Irish national average salary of €46,814 per year.

This salary puts the taxpayer in the "higher rate" income tax bracket, which means that the first €40,000 of income is taxed 20%, while the remaining amount up to €46,814 is taxed 40%. This works out to €10,726, from which we can subtract the single person and the PAYE tax credits, equating to an income tax of just under €7,176 per year.

The calculation is very similar for the Universal Social Charge, working out to €1,353 for the whole year. Determining the PRSI contribution is a little more complicated, since it involves first determining the weekly gross income and calculating the corresponding PRSI credit. In this case however, the credit is €0, meaning that PRSI is simply 4% of the gross income, or €1,873 per year.

To conclude, a single person earning an annual salary of €46,814 in Ireland is expected to pay €10,402 per year in taxes. Using the Irish PAYE system, the employer will subtract €867 from the monthly paycheck, which means that only €3,034 makes it to the taxpayer's pocket every month.

Yearly Monthly Weekly
Gross Salary €46,814 €3,901 €900
Income Tax €7,176 €598 €138
USC €1,353 €113 €26
PRSI €1,872 €156 €36
Total Tax Due €10,402 €867 €200
Take-Home Pay €36,412 €3,034 €700