Income Tax Guide

Income Tax in IrelandMost workers in Ireland pay tax through the PAYE (Pay As You Earn) system.  In this system the employer deducts the tax directly from your wages, and pays it directly to the Revenue Department.
Income Tax is payable on earnings of all kinds that result from your employment (including for example, bonuses, overtime, non-cash pay or benefit-in-kind such as the use of company car, tips, Christmas boxes etc.).
You do not pay tax on: scholarship income, interest from savings certificates, savings bonds and national instalment savings schemes with An Post, and payments to approved pension schemes.

When you start a new job – to ensure you don’t get the wrong amount of tax deducted by your new employer . You will need to :

a) Get your PPS number and give it to your employer.
The PPS (Personal Public Service ).number is your unique identification number for public services in Ireland. You can apply for a PPS number at your local Social Welfare Office.
Your employer should then let your tax office know that you have started work and that they are your employers.
b) You also need to apply to your local Tax office for a certificate of tax credits. ou need need to complete form 12A – which is an Application for a Certificate of Tax Credits and Standard Rate Cut-Off Point.

It is best to do all this as soon as you accept an offer of a job (even for part-time or holiday employment).

Tax credits reduce the amount of income tax that you have to pay. Your gross tax is calculated depending on your income. Tax credits are then deducted from the gross tax to give the amount of tax that you have to pay.
Your own personal circumstances dictate the amount of tax credits you are entitled to.

Tax credits consist of various credits and reliefs which you may be able to claim, depending on your circumstances. Every individual can claim a personal tax credit for example, and you can also claim relief for items such as private health insurance premiums and mortgage interest. Details of all the main tax allowances and reliefs (including the amount due for the current year) are given on the explanatory leaflet issued to you each year from the Revenue Commissioners with your certificate of tax credits. This information is also available from your tax office or online from the website of the Revenue Commissioners.

Emergency tax : You will be taxed at a higher Emergency rate if your employer has not received either a:

Certificate of tax credits from the tax office or,
Form P45 (parts 2 and 3) from you, in respect of your previous employment,

Emergency taxation means that they will give you a temporary tax credit for the first month of employment but tax deductions are increased progressively from the second month onwards. The effect of emergency basis tax is that after 4 weeks no tax credits are given, and tax is paid at the higher rate (41%) from week 9, regardless of the level of pay.

Income tax bands:
Income tax bands will determine the rate of tax you pay on your income or salary. See the current taxation bands here