How the Irish Tax System Works (PAYE, USC & PRSI)
When calculating your salary after tax in Ireland, Revenue Ireland applies three separate deductions to your gross earnings:
1. PAYE (Pay As You Earn) Income Tax
- Standard Rate (20%): Applies to all income up to your Standard Rate Cut-off Point (€42,000 for single individuals).
- Higher Rate (40%): Applies to all income exceeding the cut-off point.
- Tax Credits: Standard employees receive the Single Person Tax Credit (€1,875) plus the Employee Tax Credit (€1,875), totaling €3,750 deducted directly from your gross PAYE tax bill.
2. USC (Universal Social Charge)
USC is an individual progressive levy calculated on gross income before pension deductions:
- First €12,012: 0.5%
- Next €13,748 (€12,013 to €25,760): 2.0%
- Next €44,284 (€25,761 to €70,044): 4.0%
- Balance over €70,044: 8.0%
3. PRSI (Pay Related Social Insurance)
Class A employee PRSI is charged at a flat 4.1% on all earnings, which funds state pensions, maternity benefits, and jobseeker support.
Frequently Asked Questions
How much tax do I pay on a €100,000 salary in Ireland?
On a €100k gross salary, total tax and deductions equal approximately €36,500, leaving a net take-home pay of roughly €63,500 per year (€5,290/month). The marginal tax rate on every additional euro earned is 52% (40% PAYE + 8% USC + 4% PRSI).
How does pension contribution reduce Irish taxes?
Pension contributions reduce your taxable income at your highest marginal rate (up to 40% relief for higher-rate taxpayers). For every €100 you contribute to an approved PRSA or occupational pension, it only costs €60 out of your take-home pay.