PAYE: How It Works, Emergency Tax & Tax Credits

What Is PAYE?

PAYE (Pay As You Earn) is the system used by employers to deduct income tax, USC, and PRSI from your wages or salary before you are paid. Your employer uses your Revenue Payroll Notification (RPN) — issued by Revenue — to calculate the correct deductions.

Updated for 2026 Revenue rates.

Who Operates Through PAYE?

If you are an employee — full-time, part-time, or a director — you are likely on the PAYE system. Your tax credits and standard rate cut-off point are allocated to your employer so deductions are accurate from your first payslip.

Revenue Payroll Notification (RPN)

Your RPN tells your employer:

• Your tax credits (personal, employee, and any other applicable credits)
• Your standard rate cut-off point (how much income taxed at 20% before 40% applies)
• Your USC rate band
• Your PRSI class

You can view and update your RPN through myAccount on revenue.ie at any time.

Emergency Tax

If you start a new job and Revenue does not have your details, your employer may place you on emergency tax. This means:

• No tax credits applied
• Higher rate (40%) applied to all income above very low threshold
• Full USC and PRSI deducted

To avoid emergency tax, register your new job with Revenue via myAccount as soon as possible. You can claim back any overpaid emergency tax through your annual tax return or by contacting Revenue directly.

Tax Credits Available to Employees

• Personal tax credit — approx. €1,875 for single person
• Employee tax credit — approx. €1,875 for PAYE workers
• Home carer tax credit — up to €1,700 for married couples where one spouse cares for a dependent
• Single person child carer credit — €1,650 for qualifying single parents
• Rent tax credit — up to €750 (€1,500 for jointly assessed couples)

Tax Refunds

You may be due a tax refund if you:

• Were on emergency tax
• Were unemployed for part of the year
• Have allowable expenses (e.g. nursing home fees, health expenses)
• Left Ireland mid-year and are not resident for full year

You can claim a refund through myAccount by filing an income tax return — even if you are a PAYE worker with no other income. Refunds are typically processed within 5–10 working days.

End-of-Year Review

Revenue automatically reviews your tax position at year-end. If you have overpaid, Revenue issues a refund directly to your bank account. If you have underpaid, Revenue will collect the balance through reduced tax credits in the following year.