Employment taxes in Ireland

Overview of employment taxes

Employees in Ireland pay several types of taxes through the payroll system. Employers are responsible for deducting these taxes before wages are paid. Main payroll taxes include income tax, pay related social insurance (PRSI), and the universal social charge (USC).

Employer payroll contributions

Employers must make PRSI contributions for all employees. The rate depends on the employee's weekly earnings.

• 8.9% on weekly income up to €395
• 11.05% on weekly income exceeding €395

Employers do not pay a lower PRSI rate for part-time staff if their earnings are above €38 per week.

Employee payroll deductions

Employees pay income tax, PRSI, and USC. Employers deduct these at source and pay them directly to Ireland’s Revenue Commissioners.

Income tax (PAYE)

Income tax in Ireland is deducted using the Pay As You Earn (PAYE) system. Tax bands and rates depend on personal circumstances and total annual earnings.

Taxpayer type	20% rate band	40% rate on income above band
Single person	€42,000	Yes
Single parent (Single Person Child Carer Credit)	€46,000	Yes
Married one income	€51,000	Yes
Married both incomes (combined limit)	Up to €84,000*	Yes

*The combined band is limited to the lower earner's income plus €51,000, up to a maximum of €84,000.

Employees can reduce their tax by claiming standard tax credits and reliefs, available based on specific circumstances.

Pay related social insurance (PRSI)

PRSI funds social insurance benefits and is paid by both employers and employees.

• Employees earning over €352 per week pay PRSI at 4.1% of gross income.
• Employees at or below this threshold do not pay PRSI, but are still covered for entitlement to social insurance benefits.

Universal social charge (USC)

USC is a progressive tax applied to most types of income. The rate increases with earnings.

Income band (annual)	USC rate
Up to €12,012	0.5%
€12,012.01 – €27,382	2%
€27,382.01 – €70,044	3%
Over €70,044	8%
Self-employed income over €100,000	11%

USC is also applied to notional pay and some non-cash benefits.

Tax treatment of benefits in kind

Certain non-cash benefits provided by employers are taxed as if they were part of normal pay. These are known as benefits in kind (BIK). Employees with total earnings above €1,905 per year are subject to tax, PRSI, and USC on the value of BIK unless a specific exemption applies.

Common taxable benefits in kind

• Private use of a company car or van (unless high business mileage)
• Free or subsidised accommodation (exceptions apply)
• Free or subsidised childcare facilities provided outside the workplace
• Preferential loans with low or zero interest
• Private use of company credit or debit cards
• Exceptional performance awards (cash, vouchers, gifts)
• Meal vouchers with a value above exempted limits
• Employer contributions to Personal Retirement Savings Accounts (PRSAs)
• Discounts on goods or services sold below employer's cost
• Shares or options provided for free or at a discount

The taxable amount is generally based on the cost to the employer, less any amount contributed by the employee. Special calculation methods may apply to cars, accommodation, and loans.

Non-taxable benefits in kind

• Accommodation where employee is required to live due to the job
• Bicycles and safety equipment under the Cycle to Work Scheme
• Subsidised canteen meals available to all employees
• Car parking at or near the workplace
• Courses, exams, or training fees necessary for the job
• Employer pension plan contributions to an approved scheme
• Medical services paid by the employer for general check-ups
• Information technology equipment (for work use only)
• Small non-cash gifts worth €500 or less (once per year)
• Travel passes and certain professional subscriptions

Monetary awards, regular cash bonuses, and ongoing cash vouchers are always taxable, even if below the €500 annual limit.

Tax on other non-cash benefits

Benefits that do not fall under BIK rules are generally valued as income for tax purposes. For example, holiday vouchers are taxed at their full value.

How are payroll taxes paid in Ireland?

Employers deduct taxes and pay them to the Revenue Commissioners each pay period using the PAYE system.

Who is liable for PRSI contributions?

Both the employer and the employee pay PRSI. Employees must pay PRSI if they earn over €352 per week.

Are all benefits provided by an employer taxable?

Most non-cash benefits are taxable unless a listed exemption applies. Some benefits, like free parking and canteen meals available to all, are not taxed.

Can employees reduce their tax through credits or reliefs?

Yes. Employees may claim tax credits and reliefs for items like health expenses or the standard tax credit. These reduce total tax payable.

Do self-employed people pay the same USC rates?

Self-employed individuals pay higher USC rates on income above €100,000 per year.