Understanding PAYE Tax in Ireland

What is PAYE?

PAYE stands for Pay As You Earn. It's the system by which income tax, PRSI, and USC are deducted directly from your wages by your employer before you're paid. The deducted amounts are then sent to Revenue on your behalf.

What's deducted from your pay?

Your payslip will show several deductions:

• Income Tax — 20% on earnings up to the standard rate cut-off point, 40% above it
• USC (Universal Social Charge) — a tiered charge on gross income above €13,000
• PRSI (Pay Related Social Insurance) — builds entitlements to social welfare payments; most employees pay Class A at 4%

Tax credits: how your take-home is calculated

Tax credits reduce the amount of tax you actually pay. Every employee is entitled to a Personal Tax Credit (€1,875 in 2024) and an Employee Tax Credit (€1,875 in 2024). These are applied against your calculated tax, so your effective tax rate is lower than the headline rates suggest.

You claim your tax credits by registering with Revenue's myAccount and ensuring your employer is receiving your Tax Credit Certificate (TCC). If they're not, you'll be on emergency tax.

Emergency tax

If Revenue doesn't have your details, your employer must deduct tax at the emergency rate — effectively no tax credits, meaning you pay more. This is temporary. Once you register with Revenue and your employer receives your TCC, you'll be refunded any overpayment, usually in your next payslip.

How to register with Revenue

1. Go to revenue.ie and create a myAccount
2. You'll need your PPS number, date of birth, and mobile number
3. Once registered, add your new job and your tax credits will update automatically

The annual tax return

If you're a PAYE employee with no other income, you don't need to file an annual return. However, it's worth doing a review at year-end on myAccount — you may be entitled to refunds for medical expenses, remote working relief, or other credits you haven't claimed.