Money · Republic of Ireland

How income tax works in Ireland

Income Tax is calculated in bands, then tax credits reduce the bill. PAYE collects it from employment income; USC and PRSI are separate deductions.

Last reviewed 11 July 2026Published by Around.ie · Reviewed by Around Editorial DeskAs of 11 July 2026Review by 15 January 2027 and after Budget changesOwner: Money editor

The calculation in plain English

  1. Work out taxable pay.
  2. Apply the standard rate to income within your rate band and the higher rate to the balance.
  3. Subtract the tax credits available for that pay period.
  4. Calculate Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) separately.

For 2026, Revenue lists Income Tax rates of 20% within the applicable standard-rate band and 40% above it. The size of the band depends on circumstances such as marital status and whether both spouses or civil partners have income. Check Revenue’s 2026 rates, bands and reliefs.

Tax credits are not rate bands

A rate band decides how much income is taxed at each rate. A tax credit reduces the tax calculated. Under PAYE, Revenue normally spreads annual credits over the year and tells the employer the total to use, without giving the employer a breakdown. Revenue explains how tax credits work.

Check the source record: compare your payslip with the Tax Credit Certificate in Revenue myAccount. A wrong job allocation or missing credit can change deductions even where gross pay is correct.

Why take-home pay differs from Income Tax

Revenue states that PAYE payroll can deduct Income Tax, USC, PRSI and, where chosen, Local Property Tax at source. Other items:such as pension contributions, union subscriptions or salary deductions:may also appear but are not Income Tax. See Revenue’s PAYE overview.

What to check

  • Your gross and taxable pay are plausible for the period.
  • Your tax basis, rate band and credits match your Tax Credit Certificate.
  • A second job has not used credits you expected in the first.
  • Benefits in kind, pension deductions and arrears are identified clearly.
  • Year-to-date totals reconcile with earlier payslips.

Use the take-home pay estimator for a scenario, then use Revenue records for your actual tax position.

Sources and review record