Starting your first job

How your tax is calculated

Revenue will make a Revenue Payroll Notification (RPN) available to your employer when you have registered your job with Revenue. When your employer obtains the RPN they can calculate the correct deductions of:

• Income Tax
• Universal Social Charge (USC)
• Pay Related Social Insurance (PRSI).

Income Tax

Income Tax is calculated on your ‘taxable pay’. Taxable pay is the amount you earn after pension and permanent health insurance contributions are deducted.

You pay Income Tax 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 Income Tax is calculated in Calculating your Income Tax.

To make sure that you pay the correct amount of tax, always check that your tax credits are correct.

USC

This charge is in addition to Income Tax. 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.

PRSI

This charge is in addition to Income Tax and USC. PRSI deductions depend on your PRSI class. For more information, see the Department of Social Protection (DSP) website.

Next: Cumulative basis