2027 tax changes: The future Budget 2027 tax measures described here remain subject to enactment of Finance (No. 2) Bill 2026. These announced figures were checked on 29 October 2026 against the Department of Finance’s corrected tax policy document dated 12 October 2026.

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. The RPN is issued to your employer for payroll. You can view your own Tax Credit Certificate (TCC), showing your credits and rate bands, 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.

What is the difference between PAYE, USC, and PRSI?

PAYE, USC, and PRSI are all deductions that may appear on your Irish payslip, but they each serve different purposes.

Deduction What it is What the money is used for
PAYE Income tax General government spending and public services
USC Universal Social Charge Additional state funding for public finances and services
PRSI Social insurance contribution Benefits such as the State Pension, Jobseeker’s Benefit, and Illness Benefit
PRSI is different from PAYE and USC because your PRSI contributions can affect whether you qualify for certain social welfare benefits and the State Pension.

Learn more about USC and PRSI, or compare estimated PAYE, USC and PRSI for both years with the Irish Salary Calculator.

Income tax bands in Ireland: 2026 and 2027

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 ↗

From 1 January 2027, the single-person standard-rate band rises to €46,500. The married or civil-partner band is €55,500 with one income, or up to €93,000 with two incomes, subject to an increase capped at the lower of €37,500 or the lower earner’s income. This increase cannot be transferred between spouses or civil partners.

Standard item2026 / currentFrom 1 January 2027
Single-person 20% band€44,000€46,500
Personal Tax Credit€2,000€2,125
Employee Tax Credit€2,000€2,125

Source: Department of Finance — Budget 2027 taxation measures.

In 2026, the €44,000 threshold is the single person's standard rate cut-off point. Income below it is taxed at 20% and income above it at 40%. From 1 January 2027, the equivalent threshold is €46,500.

For 2026, a married couple or civil partners with one income have a €53,000 standard-rate band, rising to a maximum of €88,000 with two incomes. From 1 January 2027, the figures are €55,500 and up to €93,000.

Tax credits in Ireland: 2026 and 2027

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 usually have at least two tax credits applied 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.

What this means in real life

For an employee, PAYE is the income tax amount deducted through payroll before wages reach the bank account. The employer uses Revenue's payroll instructions, including tax credits, rate bands and tax basis, rather than choosing the deduction independently. A new job, second employment, missing credits or emergency basis can therefore change PAYE even when the hourly rate or salary stays the same. PAYE is only one part of the movement from gross to net pay; USC, PRSI, pension contributions and other deductions are calculated separately. At year end, Revenue can compare income tax paid with the final annual position. The tax credits guide explains how credits reduce PAYE, while the payslip guide shows where the deduction appears.

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. In 2026, only the portion above €44,000 is taxed at 40%; from 1 January 2027, the equivalent single-person threshold is €46,500. Income below the relevant threshold remains taxed at 20%.
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, some credits or reliefs may apply depending on circumstances — such as medical expenses, remote working relief, or the Rent Tax Credit. Revenue myAccount is the official route for many PAYE tax credit and relief claims.