Case study: Calculating your income tax

Joan is single and earns €28,000 a year. She gets her tax credit certificate from Revenue.

Joan’s tax credits are listed as:
Single Person Tax Credit = €1,775
Employee (PAYE) Tax Credit = €1,775
Tax credit total = €3,550

The standard rate cut-off point for a single person is €40,000. Because Joan’s income is below the cut-off point, all of her income is taxed at the standard rate, (20%), to give her gross tax.
28,000 x 20% = €5,600 gross tax.

All her tax credits are deducted from the gross tax to give the tax that is payable:
€5,600 - €3,550 = €2,050

Joan is also liable to pay the Universal Social Charge (USC).

USC = €506.82. This is calculated as follows:

She pays USC at a rate of 0.5% on the first €12,012 (which comes to €60.06), 2% on the next €10,908 (which comes to €218.16) and 4.5% on the balance of €5,080 (which comes to €228.60).

The total amount deducted from her annual income is:

€2,050 (income tax) + €506.82 (USC) = €2,556.82

You can get the monthly amount of the total tax that should be deducted from wages by dividing this annual figure by 12.

Or, you can get the weekly amount of the total tax that should be deducted from wages by dividing this annual figure by 52.

A single taxpayer who earns €43,200 a year will have their tax calculated as follows:

The standard rate band for a single taxpayer is €40,000.
This means that the first €40,000 is taxed at the standard rate of tax, 20%, and the remainder (€3,200) is taxed at the higher rate of tax, 40%.
€40,000 x 20% = €8,000
€3,200 x 40% = €1,280
Total = €9,280

Tax credits are deducted from this amount to give the tax due. A single PAYE (Pay As You Earn) taxpayer is entitled to
Single Person Tax Credit = €1,775
Employee (PAYE) Tax Credit = €1,775
Total = €3,550

In this example, the taxpayer is not entitled to any other tax credits so the total tax due is:
Gross tax of €9,280

Minus tax credits of €3,550
Tax due = €5,730

The USC on gross income is also payable.

USC = €1,190.82

USC is calculated as follows:

The person pays USC at a rate of 0.5% on the first €12,012 (which comes to €60.06), 2% on the next €10,908 (which comes to €218.16) and 4.5% on the balance of €20,280 (which comes to €912.60).

The total amount deducted from income in the year is:

€5,730 (income tax) + €1,190.82 (USC) = €6,920.82

See the section on tax allowances in How your income tax is calculated for a simple explanation of how to calculate the value of a tax allowance.

These examples show the different factors involved in calculating your tax in 2023.