Starting your first job
How your tax is calculated
Your employer will be sent a Revenue Payroll Notification (RPN). After they receive it they can calculate the correct deductions of:
Income Tax (IT)
Your IT is calculated on your ‘taxable pay’. This is the amount you earn after pension and permanent health insurance contributions are deducted.
You pay IT at the standard rate of tax (20%), up to the amount of your standard rate band for that pay period. Any income above your standard rate band is taxed at the higher rate of tax (40%). These two amounts are added together to give your ‘gross Income Tax’. This figure is then reduced by your tax credits to give the amount of tax that you will pay.
There are examples of how IT is calculated in Calculating your Income Tax.
To make sure that you do not pay too much or too little IT, always check that your tax credits are correct.
This charge is in addition to IT. USC deductions depend on the USC thresholds and rates that apply to you.
There are examples of how USC is calculated under Calculating your USC.
This charge is in addition to IT. PRSI deductions depend on your PRSI class. For more information, see the Department of Social Protection (DSP) website.
Next: Cumulative basis