Ireland is a top location for international businesses in the European Union (EU). It has a strong pro-business environment and acts as a gateway to Europe, especially for companies from the United States. In 2025, Ireland’s GDP is expected to grow by 1.7% to 3.4%, while inflation should stay low, around 1.8% to 2.0%. 

Technology, pharmaceuticals, and medical devices are some of Ireland’s biggest industries. Many major global companies, like Google, Apple, and Facebook, have their European headquarters in Ireland. Ireland’s labor market is doing well, with a 65.5% participation rate and just 4.0% unemployment at the end of 2024. 

Revenue Commissioners run taxes in Ireland. The system collects income tax, social insurance, and a special charge directly from salaries. For employees seeking work or companies looking to hire in Ireland, it’s important to understand how their taxes work.

This guide helps you make more informed decisions by explaining all you need to know about payroll and income deductions in Ireland.

What is Payroll Tax in Ireland?

Pay As You Earn (PAYE) is a system in Ireland where employers withhold Personal Income Tax, Pay Related Social Insurance (PRSI), and Universal Social Charge (USC) directly from employees’ wages or pensions. These amounts are then sent to Revenue office, the Irish tax authority, each time employees are paid. Taxes are collected bit by bit throughout the year, making it easier for employees to manage their money. 

Payroll Modernisation has changed how PAYE works recently. Now, employers must send payroll information to Revenue every time they pay employees, allowing Revenue to keep track of tax in real time.

Universal Social Charge (USC)

USC is a tax on gross income (before pension contributions), including benefits like company cars. Budget 2025 made the following changes on January 1.

  • The second USC band (2.0%) now applies to income up to €27,382 (up from €25,760)
  • The USC rate for income between €27,382.01 and €70,044 dropped from 4% to 3%.
Income Band (€) USC Rate (%) Notes
0 – 12,012 0.50%
12,012.01 – 27,382 2.00% The ceiling of this band increased in Budget 2025
27,382.01 – 70,044 3.00% Rate reduced from 4% in Budget 2025
Over 70,044 8.00%
Self-employed income > 100,000 11.00% Includes 3% surcharge
General Exemption Applies if total annual income is €13,000 or less
Reduced Rates For individuals aged 70+ or medical card holders (income ≤ €60,000): 0.5% on first €12,012, 2% on balance

Many social welfare payments, such as those from the Department of Social Protection, and statutory redundancy payments (up to specified limits), are exempt from USC.

Employee and Employer Contributions

PRSI

PRSI is a payment made by most employers and employees between the ages of 16 and 66. The contributions help fund social welfare programs such as pensions and other employee benefits in Ireland.

There are different PRSI classes. Class A is the most common for private sector workers and public employees hired after April 1995.

Starting October 1, 2025, PRSI rates will increase (Table II):

Type Earnings Bracket Previous Rate New Rate
Employee PRSI All earnings 4.1% 4.2%
Employer PRSI Above €527/week 11.15% 11.25%
Employer PRSI Up to €527/week 8.9% 9.0%

Employees earning €352 or less per week do not pay PRSI, but employers still do. Employees earning between €352.01 and €424 can get a PRSI credit of up to €12 per week, which lowers the PRSI they owe. Self-employed people (Class S) will also see their PRSI rate go up from 4.1% to 4.2% based on the coming October rates. 

The PRSI system is complex. It includes subclasses, and the credit phases out as earnings rise. Employers need to pay close attention and preferably use a payroll outsourcing solution like RemotePeople offers to avoid mistakes.

Weekly Earnings Band (€) PRSI Subclass Employee Rate (%) Until 30 Sep 2025 Employee Rate (%) From 1 Oct 2025 Employer Rate (%) Until 30 Sep 2025 Employer Rate (%) From 1 Oct 2025 Notes
Up to 352.00 A0 8.90% 9.00% Employer pays PRSI
352.01 – 424.00 AX 4.10% 4.20% 8.90% 9.00% Tapered PRSI Credit applies (max €12 p.w. at €352.01, reducing as earnings approach €424)
424.01 – 527.00 AL 4.10% 4.20% 8.90% 9.00% Threshold for lower employer rate increased to €527 from €496 on 1 Jan 2025 for employer
More than 527.00 A1 4.10% 4.20% 11.15% 11.25%

What is Income Tax in Ireland?

Income Tax in Ireland is charged at two main rates:

Tax Rate Description
20% Standard Rate
40% Higher Rate

How much of your income is taxed at each rate depends on your Standard Rate Cut-Off Point (SRCOP). If your income is higher than the SRCOP, the extra amount is taxed at 40%.

On January 1, 2025, the SRCOPs were also increased.

Taxpayer Category Income Threshold (EUR)
Single Person 44,000 – 48,000
Married Couple (One Income) 53,000
Married Couple (Two Incomes) Up to 84,000

Also see: Average salary in Ireland.

Category Standard Rate Cut-Off Point (SRCOP) 2026 (€) Tax Rate on Income up to SRCOP (%) Tax Rate on Income above SRCOP (%)
Single Person 44,000 – 48,000 20 40
Married Couple/Civil Partnership (One Income) 53,000 20 40
Married Couple/Civil Partnership (Two Incomes) Up to 88,000 20 40

The higher tax rate still applies to income above the cut-off, so higher earners still pay more tax. Also, in married couples with two incomes, the extra SRCOP is not transferable. 

Ireland also offers tax credits, which directly reduce the income tax employees pay. Some credits, like the Personal and Employee Tax Credits, apply to most people. Others, like the Home Carer or Rent Credit, help specific groups.

These credits lower your tax bill by a fixed amount. However, the credits have less impact compared to the effect of tax bands and rates for high earners. 

Using the RemotePeople global payroll calculator can help you figure out all employee payments, deductions, and tax compliance with a click. You can avoid run-ins with the law by using our accurate tool programmed to work in more than 150 countries worldwide. Best part? It’s completely FREE.

Pensions and Special Tax Considerations

Companies looking to, or already doing business in Ireland, should be aware that the country is introducing a new national pension savings system called My Future Fund.

It is part of the Automatic Enrollment (AE) reform and will begin collecting contributions from 1 January 2026. Employees will be automatically enrolled in My Future Fund if they meet all of the following conditions:

  • Aged between 23 and 60
  • Earn more than €20,000 per year
  • Not already in a qualifying occupational pension scheme

Employees who do not meet these conditions may still be allowed to join the scheme voluntarily if they are not already in a pension plan.

How will contributions work? 

The My Future Fund uses a phased contribution system. This means the amounts employees, employers, and the government contribute will slowly increase over time. Visit the associated webpage at the Department of Social Protection to learn more.

RemotePeople Simplifies Payroll and Tax in Ireland

Handling payroll and taxes in Ireland requires careful attention from both employers and employees. Apart from contributions, employers must register with Revenue, report pay and taxes in real-time, calculate deductions correctly, manage benefits, and prepare for the upcoming auto-enrolment pension scheme.

Employees also need to get a Personal Public Service Number (PPSN), register on Revenue’s myAccount, and stay informed about tax credits and pension contributions.

Because the rules are tedious, detailed, and often change each year, it can be difficult for companies and employees to stay compliant, especially if they’re hiring/working across borders or don’t have a full in-house payroll team.

RemotePeople offers complete outsourced payroll and Employer of Record services for businesses hiring in Ireland. Our expert team:

  • Manages online employer registration, monthly payroll processing, and tax filings. 
  • Ensures accurate calculation of Income Tax, PRSI, USC, and proper payroll deductions.
  • Monitors and updates compliance with changing local labor laws and tax regulations. 
  • Provides a user-friendly global payroll platform that delivers timely payslips, transparent reporting, and secure data management

As a result, businesses can hire remote or Ireland-based employees without setting up a local entity or mastering the payroll law. No need to navigate complex tax rules alone. RemotePeople handles all the boring work, allowing companies to focus on growth, monitoring, and transparency.