3rd February 2026
Ireland Income Tax Bands & Credits – Employees vs Self-Employed
Understanding how Irish income tax works starts with two key building blocks: tax rate bands and tax credits.
Tax rate bands determine how much of your income is taxed at 20% or 40%, while tax credits directly reduce the amount of income tax you pay. Although the core income tax rates are the same for employees and the self-employed, the credits available and the way tax is paid can differ.
The table below outlines the main income tax bands and credits, with a side-by-side comparison for PAYE employees and self-employed individuals in Ireland.
Item | Employee (PAYE) | Self-Employed / Sole Trader |
Standard Income Tax (IT) Rates | 20% on first slice, 40% above band | Same tax rates (20%/40%) on taxable profits |
Standard Rate Band (2025/2026) | • Single: €44,000 at 20% | Same bands apply to personal income for self-employed |
Personal Tax Credit | €2,000 | €2,000 |
Employee (PAYE) Tax Credit | €2,000 | N/A (Not available to self-employed) |
Earned Income Tax Credit | N/A (unless also self-employed) | €2,000 (for qualifying self-employed income) |
Total Basic Credits (typical) | €4,000 (single PAYE) | €4,000 (self-employed) |
Married Couple or Civil Partners Tax Credit ** | €4,000 | €4,000 |
Other Common Credits | May include Home Carer (€1,950); Single Parent Child Carer (€1,900); Blind Person; Rent Credit | Same credits available if criteria are met |
How Credit Applies | Reduces the taxpayer’s income tax liability | Reduces income tax liability similarly |
How Tax Is Paid | Deducted via payroll (PAYE) with RPN provided to employer | Paid via Form 11; preliminary tax payments required |
Revenue Filing | Typically Form 12 for additional claims | Mandatory Form 11 for self-assessment |
Rate Band Allocation | Shown on your Tax Credit Certificate | Revenue assigns tax bands based on status and estimates of income |
Interaction of Credits/Bands | Credits/bands may be shared under joint assessment for married couples | Same rules for joint assessment; Earned Income Credit replaces PAYE credit |
* For couples with two incomes, the €88,000 standard rate band is made up of €53,000 plus up to €35,000 of the lower earner’s income at the standard 20% rate.
** Married couple or Civil Partners Tax Credit replaces Personal Tax Credit and can be shared between 2 Spouses (or Civil Partners) or applied to the one with higher income.
Quick Notes
- Standard rate bands (20% slice) determine how much income is taxed at 20% before moving to the higher rate (40%).
- Credits reduce the total tax payable — they do not reduce taxable income.
- Employees get a specific PAYE credit, whereas self-employed get an Earned Income credit instead.
- If you have both self-employed and PAYE income, Revenue will generally apply whichever credit is appropriate to each income source on your tax return.
USC & PRSI – Key Differences (Employees vs Self-Employed)
Charge | Employee | Self-Employed |
USC (Universal Social Charge) | Progressive on income: 0.5% up to €12,012 → 2% → 3% → 8% | Same USC bands; additional 3% surcharge on self-employed income above €100,000 |
PRSI (Social Insurance) *** | Class A contributions: 4.2% employee rate (employer also pays 9% or 11.25% depending on earnings) | Class S: 4.2% on all self-employed income (no employer share) |
***On 1 October 2026, all PRSI contribution rates will increase by 0.15%.
USC applies to all income before tax credits. PRSI is a separate social insurance contribution and not reduced by tax credits.
If you are unsure whether you are claiming all available credits or whether your tax rate bands are set up correctly, now is a good time to review your position. Please contact our tax team if you would like a personalised review or assistance with your tax planning for the year ahead.
