Calculating your Income Tax
Basis of taxation
The amounts of your personal tax credits and rate band applied in any pay period are decided by the relevant tax basis. This will determine how your income is taxed.
Based on your individual circumstances, your income may be taxed on a cumulative basis, Week 1 basis or emergency basis.
Cumulative basis
Payroll tax is normally calculated using the ‘cumulative basis’ for each pay day. All income and tax credits from the previous 1 January are accumulated to ensure that you have paid the correct tax. This ensures that you have received the benefit of all your tax credits to date.
Week 1 basis
Sometimes tax is calculated using the Week 1 basis. You may receive a Tax Credit Certificate (TCC) on the Week 1 basis (also known as the ‘non-cumulative basis’). This means that your employer will deduct Income Tax and Universal Social Charge (USC) from your pay on a week-to-week basis. Your yearly tax credits and rate bands are not backdated to 1 January and do not accumulate for each pay period. Your employer cannot make any refunds of Income Tax or USC that may be due to you until a ‘cumulative’ TCC is issued.
Week 1 basis is used for various reasons, for example, where:
- there is a large reduction in your tax credits that may result in hardship for you
- there is a lack of information about your prior employments or earnings in the current tax year
- you have come from abroad to work in Ireland, but we do not know how long you plan to stay
- you transfer your tax credits and rate band to your spouse or civil partner
- you do not want your new employer to know the details of your previous employments, pay and tax.
- Example
John is a PAYE employee. He is single, and the following are his tax credits and rate band for 2025:
Tax credits and rate band
|
Description
|
Value
|
|
Single Person’s Tax Credit
|
€2,000
|
|
PAYE Tax Credit
|
€2,000
|
|
Total tax credits
|
€4,000 per year (€76.92 per week)
|
|
Rate band
|
€44,000 per year (€846.15 per week)
|
John was given a TCC showing these tax credits and rate band and showing that Week 1 basis applies. A Revenue Payroll Notification (RPN) was made available to his employer with the total amount.
John earns €600 per week. This is how his weekly tax is calculated:
John's weekly tax calculation for pay day 14 January 2025
| Description |
Income |
Tax |
Explanation |
| Taxed at 20% |
€600 |
€120.00 |
Apply the standard rate of 20% up to the limit of the rate band (846.15) on the RPN. |
| Taxed at 40% |
€0 |
€0 |
As John’s income (€600) is less than his rate band (€846.15), he does not pay tax at the higher rate of 40% this week. |
| Gross tax |
|
€120 |
Add the amount of tax at the standard rate to the amount of tax at the higher rate (if any). |
| Less tax credits |
|
€76.92 |
Take away the tax credits as shown on the Tax Credit Certificate. |
| Tax Payable |
|
€43.08 |
Gross tax less credits. |
John's weekly tax calculation for pay day 21 January 2025
| Description | Income | Tax | Explanation |
|---|
| Taxed at 20% |
€600 |
€120.00 |
Apply the standard rate of 20% up to the limit of the rate band (€846.15) on the RPN. |
| Taxed at 40% |
€0 |
€0 |
As John’s income (€600) is less than his rate band(€846.15), he does not pay tax at the higher rate of 40% this week. |
| Gross tax |
|
€120.00 |
Add the amount of tax at the standard rate to the amount of tax at the higher rate (if any). |
| Less tax credits |
|
€76.92 |
Take away the tax credits as shown on the Tax Credit Certificate. |
| Tax payable |
|
€43.08 |
Gross tax less credits. |
You can contact Revenue to find out why you are on the Week 1 basis, by using the MyEnquiries service in myAccount.
If you are still on the Week 1 basis at the end of the year, you should submit an Income Tax Return. You can find an Income Tax Return in ‘PAYE Services’ in myAccount. We will then review your tax position for the year.
Emergency basis
Emergency basis of taxation may be applied by your employer in certain circumstances.
Different rules for Emergency Tax apply depending on whether you have provided your employer with your PPSN and weather you are registered for Pay As You Earn (PAYE).
Next: What is the difference between gross and taxable pay?