Taxing Wages 2025

The national currency is the Euro (EUR). In 2024, EUR 0.92 was equal to USD 1. In that year, the average worker earned EUR 64 158 (Secretariat estimate).

Tax is levied on the combined income of both spouses. Either spouse may, however, opt for separate assessment, in which case the tax payable by both spouses must be the same as would be payable under joint taxation. A further option allows either spouse to opt for assessment as single persons in which case they are treated as separate units. The calculations presented in this Report are based on family taxation.

• Basic reliefs: The single person's credit is EUR 1 875 per year.

• Standard marital status reliefs: The married person's credit is EUR 3 750 per year (i.e. twice the basic credit of EUR 1 875).

• Employee credit: This is a non-transferable tax credit. With the exception of certain company directors and their spouses and the spouses of partners in partnership cases, all employees, including (subject to certain conditions) children who are full-time employees in the business of their parents, are entitled to an employee credit of EUR  1 875.

• Earned Income credit: Individuals in receipt of earned income are entitled to an earned income credit of EUR  1 875. Note: The combined employee credit and earned income credit is limited to EUR 1 875.

• One-Parent Family credit: The single parent family credit is EUR 1 750.

• Medical Insurance: Relief at the taxpayer’s standard rate of tax is available for taxpayers who make a payment to an authorised insurer under a contract which provides for the payment of medical expenses resulting from sickness of the person, his wife, child or other dependants. The maximum relief is EUR 1 000 in respect of an adult and EUR 500 in respect of a child. This relief is now granted at source and is paid to the insurance provider.

• Work related Expenses: These are relieved to the extent that they are wholly, exclusively and necessarily incurred in the performance of the duties of an employment.

• Home Carers Allowance: This is a tax credit of EUR 1 800 for families where one spouse works at home to care for children, the aged or incapacitated persons, where the carer spouse’s income does not exceed EUR 7 199. A reduced measure of relief is granted for income between EUR 7 200 and EUR 10 800: if the income exceeds EUR 7 200 the tax credit is reduced by one half of the income of the Home Carer that exceeds this limit. This credit and the increased standard rate tax band for two income couples (see tax schedule below) are mutually exclusive but the person may opt for whichever is the more beneficial. If the Home Carer earns income of up to EUR 7 200 in his/her own right for the tax year, the full tax credit may be claimed. For the purposes of this tax credit, income means any taxable income such as income from a part-time job, dividends, etc. but does not include the Carer’s Allowance payable by the Department of Social Protection.

Where total income of an individual aged 65 and over is less than or equal to the income exemption limit that income is exempt from tax.

Exemption limits:

• Single / Widowed: EUR 18 000

• Married: EUR 36 000

The exemption limits may be increased in respect of children, as follows:

• One or two children (each): EUR 575

• Subsequent children: EUR 830

The marginal relief rate of tax applies where liability to tax at the marginal relief rate is less than that which would be chargeable under the normal tax schedule and where total income is less than twice the relevant exemption limit, otherwise tax is charged under the normal tax schedule.

Marginal relief tax is charged, where applicable, at a rate of 40% on the difference between total income and the relevant exemption limit.

The USC is charged on an individualised basis on gross income at 0.5% on income up to and including EUR 12 012, at 2% for income in excess of EUR 12 012 but not greater than EUR 25 760, at 4% for income in excess of EUR 25 760 but not greater than EUR 70 044, and at 8% above that level. The lower exemption threshold is EUR 13 000.The USC does not apply to social welfare payments, including contributory and non-contributory social welfare State pensions.

USC rates for individuals whose total income does not exceed EUR 60 000 and who are (a) aged 70 years and over or (b) who hold full medical cards: The 2% rate applies to all income over EUR 12 012.

There is a surcharge of 3% on individuals who have income from self-employment that exceeds EUR 100 000 in a year.

No State or local income taxes exist in Ireland.

Contributions are payable at a rate of 4 percent of an employee's gross earnings less allowable superannuation contributions.1 No distinction is made by marital status or sex. Those earning less than EUR 352 per week are exempt. The following is a breakdown of the 2024 rate of contribution together with ceilings where applicable:

A PRSI credit was introduced in 2016 which reduces the amount of PRSI payable for people earning between EUR 352.01 and EUR 441 per week. The credit is tapered and the amount of the credit depends on your earnings. The maximum credit is EUR 12. If you earn between EUR 352.01 and EUR 441 per week, the maximum credit of EUR 12 is reduced by one-sixth of the amount of your weekly earnings over EUR 352.01.

Like employees' contributions, employers' contributions are payable as a percentage of gross employee earnings less allowable superannuation contributions. The following is a breakdown of the 2024 rate of contribution:

In 2024, the total employers’ contribution is 11.05% and is reduced to 8.8% in respect of employees earning less than EUR 441 per week.

None.

These are payable to all children under the age of 16 (or under 19years, if the child is undergoing full time education by day or is incapacitated and likely to remain so for a prolonged period). These payments do not depend on any insurance or on the means of the claimant. The amounts payable in 2024 are as follows:

If you have twins, you get one-and-a-half times the normal monthly rate of Child Benefit for each child. For triplets and other multiple births, Child Benefit is paid at double the normal monthly rate for each child, provided at least 3 of the children meet the conditions (such as being under 16).

Working Family Payment: A non-taxable family income supplement that is payable to low-income families where either the principal earner and/or the spouse are in full-time employment. Full-time employment is defined as working nineteen hours per week or more. The hours worked by the principal and the spouse can be aggregated for the purposes of this definition. When calculating income for the purposes of the relief superannuation payments, social welfare payments, tax payments, health and employment and training levies are all subtracted to arrive at disposable income.

The level of payment is dependent on the amount of family income and the number of children. The supplement payable is 60% of the difference between the family income and the income limit applicable to the family. A minimum of EUR 20 per week is payable to eligible families. No supplement is payable to families with income in excess of the relevant income limit.

The income limit for a family with two children in 2024 is EUR 746 per week.

One Parent Family Payment: This payment is available for men and women who for a variety of reasons are bringing up a child or children without the support of a partner and whose youngest child is aged under 7. The payment which is means tested includes an earnings disregard of €165 per week with earnings over that amount being assessed at 50%. This means that a person with earnings of €165 per week and no other means can receive a full rate payment. The amount of the full payment for 2024 is EUR 232 per week (plus EUR 46 per week for each child).

Although not included in the modelling there are two other payments which are worthy of mention here. Jobseeker's Transitional Payment is a means-tested payment for lone parents whose youngest child is aged 7 or over but under age 14 (subject to meeting all of the other qualifying conditions). Also, most social welfare payments include an Increase for a Qualified Child (IQC) which may be payable in addition to the personal rate of payment. In 2024 the weekly rates are €46 for a child aged under 12, and €50 for a child aged 12 or over (up to age 22 if in full-time education).

In recognition of the cost of living pressures brought about energy and cost of living inflation pressures, a number of one-off measures were introduced in 2023 And 2024. Most of these one-off payments occurred on the welfare side with the exception of one-off temporary reductions in VAT and excise duty.

The welfare changes are as follows–

• February Bonus – This one- off payment provided an extra €200 for all social welfare recipients.

• Working Family Payment – in April 2023 a one off payment of €200 was provided to people who receive the Working Family Payment and do not qualify for the extra payment based on another social welfare payment.

• Child Benefit - An additional once-off payment of €100 per child to parents who receive Child Benefit was paid in June 2023. Budget 2024 provided a double month’s payment of Child Benefit in December 2023.

• Increase for Qualified Child – Budget 2024 provided a one-off payment of €100 to people who get an increase for a qualified child, one payment for each child payable the week beginning 27 November 2023.

• Budget 2024 provided People in receipt of long-term payments received a Christmas bonus of a double weeks’ payment in December 2023 and a further double weeks’ payment in January 2024.

• A lump sum payment of €300 was paid to recipients of the Fuel Allowance in November 2023.

  Budget 2023 one-off measures:

• Double weeks payment to recipients of most social welfare payments in October 2022;

• €400 lump payment to all households receive the Fuel Allowance (November 2022);

• €200 lump sum payment for pensioners with a disability receiving the Living Alone Allowance (November 2022);

• €500 lump sum payment to all families in receipt of the Working Family Payment (November 2022)

• Double Child Benefit Payment in respect of each child (November 2022)

• Double weeks payment to recipients of most social welfare payments in December 2022;

In addition to account for the cost of energy pressures, Electricity credits were provided on a non-means tested based. These were announced in September 2022 and rolled on to cover energy bills up to March 2023. The payments were made in 3 instalments with the first payment in November 2022, the second in January 2023, and the third made in March 2023. The Electricity credits are not covered in Taxing Wages.

Individuals in receipt of earned income are entitled to an earned income credit of EUR 1 650 for 2021, increasing to 1 700 in 2022. Note: The combined employee credit and earned income credit is limited to EUR 1 775.

The TWSS, EWSS and PUP schemes referred to in previous years reports have ceased. Enhanced Illness Benefit will be in place until the end of September 2022.

Information not available, although such schemes do exist.

The equations for the Irish system in 2020 are mostly on a family basis using mainly a tax credit system for the first time. But social security contributions are calculated separately for each spouse. This is shown by the Range indicator in the table below.

The functions which are used in the equations (Taper, MIN, Tax etc) are described in the technical note about tax equations. Variable names are defined in the table of parameters above, within the equations table, or are the standard variables “married” and “children”. A reference to a variable with the affix “_total” indicates the sum of the relevant variable values for the principal and spouse. And the affixes “_princ” and “_spouse” indicate the value for the principal and spouse, respectively. Equations for a single person are as shown for the principal, with “_spouse” values taken as 0.