How PAYE works

As an employee in Ireland, you do not calculate or pay your own income tax. Your employer does it for you through the PAYE system. Each time you are paid — weekly, fortnightly, or monthly — your employer deducts the correct amount of tax and sends it directly to Revenue.

Revenue tells your employer how much tax to deduct by issuing a Revenue Payroll Notification (RPN). This document contains your tax credits and rate band, which your employer uses to calculate your deductions. You can view your own RPN at any time by logging into myAccount on Revenue.ie.

PAYE only applies to employees. If you are self-employed, you pay income tax through a different system called self-assessment. You file a tax return each year and pay the tax yourself.

Income tax rates in 2026

Ireland has two income tax rates. The rate you pay depends on how much you earn.

Income Tax rate
Up to €44,000 (single person)20%
Everything above €44,00040%

Source: Revenue.ie — Tax rates, bands and reliefs 2026 ↗

The €44,000 threshold is called your standard rate cut-off point. Income below this is taxed at 20% (the standard rate). Income above it is taxed at 40% (the higher rate).

These thresholds are different if you are married or in a civil partnership. A married couple with one income has a €53,000 standard rate band. With two incomes, this can increase to a maximum of €88,000.

How tax credits reduce what you pay

Tax credits directly reduce the amount of income tax you owe. They are not deductions from your income — they are deductions from your tax bill itself.

Most PAYE workers in Ireland are entitled to at least two tax credits automatically:

Tax credit Amount (2026)
Personal tax credit€2,000
Employee (PAYE) tax credit€2,000
Total standard credits€4,000

Source: Revenue.ie — Tax credits 2026 ↗

This means €4,000 is taken off your gross tax bill every year. Other credits may apply depending on your circumstances — for example, the Single Person Child Carer Credit or the Home Carer Tax Credit.

Worked example

Here is how PAYE income tax is calculated for a single person earning €40,000 per year in 2026.

Step Calculation Amount
Full income taxed at 20%€40,000 × 20%€8,000
Nothing above standard rate band€0 × 40%€0
Gross tax€8,000
Less: Personal tax credit−€2,000€2,000
Less: Employee (PAYE) tax credit−€2,000€2,000
Income tax due€4,000

This is an example only. Your tax will depend on your exact income, credits, and circumstances. Calculation based on Revenue.ie income tax calculation method ↗

Remember: PAYE income tax is separate from USC and PRSI. All three appear as separate deductions on your payslip. See our guides on USC and PRSI for a full picture.

Common confusion

No. They are three separate deductions. PAYE is income tax. USC is the Universal Social Charge. PRSI is Pay Related Social Insurance. Each is calculated differently and shown as a separate line on your payslip.
No. Only the portion of your income above €44,000 is taxed at 40%. The first €44,000 is still taxed at 20%. This is one of the most common misconceptions about Irish tax.
No. Your employer is legally required to send all deducted PAYE tax to Revenue. They act as a collection agent on Revenue's behalf. Your payslip should show exactly how much was deducted.
Mostly true, but not entirely. Your employer handles your tax automatically. However, you may be missing credits or reliefs you are entitled to — such as medical expenses, remote working relief, or the rent tax credit. You can claim these through myAccount on Revenue.ie.