What Does an Employee Cost in Ireland? Salary and PRSI Explained

What Does an Employee Cost in Ireland? Salary and PRSI Explained

Rates applicable on 1 October 2026

Understanding payroll in Ireland starts with two terms: gross pay and net pay. Gross pay is your earnings before deductions. Net pay, also called take-home pay, is the amount you receive after deductions.

This guide covers a single employee aged between 16 and 66, with one job, full standard tax credits and ordinary Class A social insurance. It assumes standard USC rates, no benefits in kind, no pension contributions and no other deductions or additional tax reliefs.

The basic calculation is:

Gross pay − Income Tax − USC − employee PRSI = net pay

Income Tax: Rates and Credits

Employers deduct Income Tax through PAYE, meaning “Pay As You Earn”. For a single person without qualifying children, the first €44,000 of annual income is taxed at 20%. Income above this amount is taxed at 40%. The higher rate applies only to the portion above €44,000.

In 2026, the standard Single Person Tax Credit is €2,000, and the Employee Tax Credit is €2,000. Together, these reduce annual Income Tax by €4,000. Tax credits reduce the tax bill rather than the income being taxed.

Universal Social Charge: USC

USC is a separate charge calculated using these standard annual bands:

Each rate applies only to the income within its band. If total annual income is €13,000 or less, no USC is payable. If income exceeds that limit, USC applies to the full income using the relevant bands.

Employee PRSI

PRSI means “Pay Related Social Insurance” and helps fund social welfare benefits.

Employees earning up to €352 per week pay no employee PRSI. A tapered credit reduces the charge for weekly earnings between €352.01 and €424. Above €424, the full 4.35% applies to all gross earnings.

Employer PRSI: An Additional Business Cost

Employers also pay their own contribution, often shown as PRSI ER. This is paid on top of gross wages and does not reduce the employee’s take-home pay.

From 1 October 2026, ordinary Class A employer rates are:

The applicable rate is charged on the whole gross payment, rather than only the amount above the threshold.

Within the scope of this guide:

Employer’s total cost = gross pay + employer PRSI

Two Simple Monthly Examples

These payroll examples show an ordinary month from October 2026 onwards. They assume equal earnings throughout the year, with annual tax bands and credits spread across 12 months. Both salaries attract employer PRSI at 11.40%.

For Example 1, annual Income Tax is €36,000 × 20%, less €4,000 in credits: €3,200, or approximately €266.67 monthly.

For Example 2, annual Income Tax is €44,000 × 20%, plus €16,000 × 40%, less €4,000 in credits: €11,200, or approximately €933.33 monthly.

The employer deducts the employee’s Income Tax, USC and PRSI from gross wages and pays these to Revenue together with employer PRSI. The employee deductions are already included in gross pay, so they are not added again when calculating the employer’s cost.

The employer totals include the employee’s full gross salary plus employer PRSI at 11.40%.

Actual payroll figures may vary slightly because of rounding, earlier earnings or the allocation of tax credits. These examples use the October PRSI rates for a monthly payment; those rates should not be applied retrospectively to the whole of 2026.

Need help calculating wages or understanding your costs as an employer in Ireland? Contact our team for clear, practical guidance on salary calculations, tax deductions and employer PRSI.