Three deductions, not one

Most people in Ireland look at income tax and stop there. Your payslip actually shows three main deductions: income tax (PAYE), the Universal Social Charge (USC) and Pay Related Social Insurance (PRSI). The last two are charged on your gross pay and are not reduced by your tax credits.

Income tax in short

For 2026 the standard rate is 20% on income up to the standard rate cut off point and 40% above it. For a single person that point is €44,000. Credits then reduce the tax bill. A single PAYE worker usually gets a personal credit and a PAYE credit of €2,000 each.

USC bands

USC is a tax on gross income with its own bands. For 2026 the rates are:

  • 0.5% on the first €12,012
  • 2% on the next €16,688, up to €28,700
  • 3% on income from €28,700 up to €70,044
  • 8% on income above €70,044

If your total income is €13,000 or less in the year, you do not pay USC at all. Lower income earners and medical card holders aged 70 or over on low incomes can also qualify for the reduced rates.

PRSI

PRSI funds social welfare benefits such as the State Pension (Contributory), Jobseeker's Benefit and maternity benefit. Most employees pay Class A. The employee rate is rising to 4.35% from 1 October 2026, up from 4.2%, so your payslip will change part way through this tax year. There is a PRSI credit for lower earners, which reduces the amount owed on weekly pay in a set range.

A worked example on €40,000

  • Income tax: €40,000 at 20% is €8,000, less €4,000 in credits, so €4,000.
  • USC: €60.06 on the first band, €333.76 on the second and €339.00 on the rest, so about €733.
  • PRSI: 4.35% of €40,000 is €1,740 at the new full year rate.

That is about €6,473 in deductions, leaving roughly €33,527 for the year, or about €2,794 a month. Because PRSI changes on 1 October, your actual figure for this year will be slightly higher than that.

Why USC feels unfair to some people

USC has no tax credits, so it is charged from the first euro above the exemption limit. Two people on the same income pay the same USC no matter their family situation. This is why a person on €30,000 can feel their payslip is lighter than the income tax alone would suggest.

What you can do about it

  • Pension contributions reduce your income tax, but not your USC or PRSI.
  • Check your tax credit certificate in Revenue myAccount at the start of every year.
  • If you are a medical card holder or aged 70 or over, check the reduced USC rate.

Try your own numbers

Put your salary into the Ireland salary calculator to see income tax, USC and PRSI side by side, and what lands in your account each month.

A second example on €70,000

Take a single PAYE worker earning €70,000 a year.

  • Income tax: €44,000 at 20% is €8,800, and the remaining €26,000 at 40% is €10,400. That is €19,200, less €4,000 in credits, so €15,200.
  • USC: €60.06 on the first band, €333.76 on the second, and 3% of the €41,300 above €28,700, which is €1,239. Total about €1,633.
  • PRSI: 4.35% of €70,000 is €3,045.

Deductions come to about €19,878, leaving around €50,122 a year, or roughly €4,177 a month. Notice that more than a third of the deductions at this level come from the 40% income tax band, so a pension contribution that cuts your taxable pay saves you tax at 40% on every euro you put in.

Questions people ask

Why did my PRSI change in October? The rate for Class A employees rises from 4.2% to 4.35% from 1 October 2026, so your net pay falls a little on every payslip after that date.

Can I get USC back? Only if you were charged at the wrong rate, for example you qualify for the reduced rate but your employer did not apply it. Check your Revenue myAccount and ask for a review.

Are the self employed treated the same? No. They pay Class S PRSI and file a return, and the rates differ. Their calculation is done through the Form 11 or Form 12.

Do bonuses get taxed more? The tax is the same rate, but a bonus can push you into the 40% band for that pay period, so it can look larger on one payslip than it ends up over the year.

Does USC apply to pension contributions? Pension contributions reduce your income tax, but USC and PRSI are still charged on the gross pay before the contribution.

What if I have two jobs? Your credits and cut off point are normally applied to the main job, and the second job is taxed at the higher rate. Revenue can move the credits if you ask.