Income tax
Income tax in Ireland is charged at 20% and 40%, collected by Revenue through PAYE and self-assessment.
Published Friday 18 September 2026
Table of contents
Key takeaways
- Income tax funds public services and is collected by Revenue, the Revenue Commissioners.
- Ireland charges two rates, 20% and 40%, split at the standard rate cut-off point of €44,000 for a single person in 2026.
- Employees pay through Pay As You Earn (PAYE), and self-employed people file a self-assessment return. The Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) apply alongside income tax.
- Ireland uses tax credits rather than a standard deduction to lower your bill.
Types of income tax in Ireland
Income tax is the charge you pay on the money you earn from work, a trade, or a business. How you pay it depends on whether you’re an employee or you run your own business, and a few related charges sit alongside it.
PAYE income tax
If you’re an employee, your income tax is handled under the Pay As You Earn (PAYE) system. Your employer works out the tax due on each payslip and sends it to Revenue on your behalf, so the amount reaches you already deducted.
Self-assessment income tax
Self-employed people, sole traders, and proprietary directors who control more than 15% of a company pay through self-assessment. You work out your own tax, file a Form 11, and pay through the Revenue Online Service (ROS).
Corporation tax
If your business operates as a company, its profits are charged to corporation tax rather than personal income tax. Trading income is taxed at 12.5%, while non-trading income such as rents and investment income is taxed at 25%.
Large multinational groups with consolidated turnover of €750 million or more pay a 15% minimum effective rate under the OECD Pillar Two rules. Companies below that threshold keep paying 12.5%, as Citizens Information explains.
Universal Social Charge and PRSI
Two further charges apply to most income on top of income tax. The Universal Social Charge (USC) and Pay Related Social Insurance (PRSI) are both collected by Revenue.
For 2026, the standard USC rates are 0.5% on income up to €12,012, 2% on income from €12,012 to €28,700, 3% on income from €28,700 to €70,044, and 8% above €70,044. Self-employed income over €100,000 carries a further 3%, giving a top rate of 11%. You’re fully exempt from USC if your total income for the year is €13,000 or less, according to Citizens Information.
PRSI builds your entitlement to social welfare benefits such as the State Pension. The Class A employee rate is 4.2% for most of 2026, rising to 4.35% from 1 October 2026 under a legislated schedule, as set out by Citizens Information.
How income tax rates and bands work
Ireland taxes personal income at two rates: 20%, the standard rate, and 40%, the higher rate. The point where you move from one to the other is called the standard rate cut-off point (SRCOP).
You only pay 40% on the part of your income above the cut-off, not on everything you earn. For 2026 the SRCOP is €44,000 for a single person, €53,000 for a married couple or civil partners with one income, and up to €88,000 for two incomes, made up of €53,000 plus up to €35,000 from the second earner, as set out in the Citizens Information guide to how your tax is calculated. Budget 2026 left these rates, bands, and the main tax credits unchanged, as confirmed by Citizens Information.
This is why your marginal rate, the rate on your next euro earned, can be higher than your effective rate, the average rate across all your income. Someone earning just above the cut-off still pays 20% on the bulk of their earnings, so their overall bill stays well below 40%.
How to calculate income tax
Working out income tax in Ireland is a two-step idea: apply the rates to your income, then take your credits off the tax due. Here’s the order to follow.
- Add up your total income for the year.
- Apply 20% to income up to the standard rate cut-off point, which is €44,000 for a single person in 2026.
- Apply 40% to any income above that cut-off.
- Add the two amounts together to get your gross tax.
- Subtract your tax credits euro for euro to get the income tax you owe.
Take a single person earning €50,000 in 2026. The first €44,000 is taxed at 20%, which is €8,800, and the remaining €6,000 is taxed at 40%, which is €2,400, giving gross tax of €11,200. After subtracting the Personal Tax Credit of €2,000 and the Employee (PAYE) Tax Credit of €2,000, the income tax due is €7,200, before USC and PRSI.
Tax credits and reliefs
Tax credits are the reason two people on the same salary can owe different amounts. They come straight off the tax you’ve calculated, euro for euro, rather than reducing the income that gets taxed.
For 2026, the main credits are worth €2,000 each: the Personal Tax Credit (€4,000 for a married couple), the Employee (PAYE) Tax Credit, and the Earned Income Credit for self-employed people and proprietary directors, who can’t claim the Employee credit. Revenue sets out the current amount on its Employee Tax Credit page.
Reliefs work differently from credits. If you’re self-employed, allowable business expenses reduce the profit you’re taxed on, so it pays to track allowable expenses carefully throughout the year.
Reporting and paying income tax
How you report depends on how you earn. Employees are covered automatically through PAYE, so their employer reports and pays the tax during the year.
If you’re self-employed, you file a Form 11 through ROS and pay preliminary tax towards the current year. Businesses pay tax on their net profit, so accurate records make the return far easier to complete.
For the 2025 income tax year, the Form 11 return and the balance of tax are due by 31 October 2026, together with preliminary tax for 2026. If you both file and pay through ROS, you get an extended deadline of 18 November 2026, as set out on Revenue’s Pay and File page.
What information do you need to calculate income tax?
Good figures make a clean return. Before you calculate income tax, gather the numbers that show what your business earned and what it can offset.
- Revenue and expenses from your income statement, also known as the profit and loss
- Capital allowances on business assets
- Tax credits and reliefs you’re entitled to claim
Keeping tidy accounting records throughout the year means these figures are ready when you need them. Accounting software pulls your income and expenses together automatically, so the totals for your return are a few clicks away.
Simplify your income tax with Xero
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FAQs on income tax
Here are quick answers to some common questions about income tax in Ireland.
What are the income tax rates in Ireland?
Ireland charges income tax at 20% up to the standard rate cut-off point and 40% on income above it. For a single person in 2026, that cut-off point is €44,000.
What is the difference between a tax credit and a tax deduction?
A tax credit comes off the tax you owe, euro for euro, while a deduction or allowable expense reduces the income that gets taxed. Ireland relies on credits rather than a single standard deduction.
Who has to file a self-assessment tax return?
Self-employed people, sole traders, and proprietary directors who control more than 15% of a company file a self-assessment Form 11. Employees taxed only through PAYE usually don’t need to.
When is the income tax deadline in Ireland?
For the 2025 income tax year, the deadline is 31 October 2026. If you file and pay through ROS, it extends to 18 November 2026.
Related terms
Learn more about income tax
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.