Case study: Calculating your income tax

These examples show how your tax is calculated in 2025 and how tax credits reduce the amount of tax you have to pay.

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 = €2,000
• Employee (PAYE) Tax Credit = €2,000
  Tax credit total = €4,000

The standard rate cut-off point for a single person is €44,000. 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 - €4,000 = €1,600

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

USC = €386. This is calculated as follows:

• A rate of 0.5% on the first €12,012 (which comes to €60.06)
• 2% on the next €15,370 (which comes to €307.40)
• 3% on the balance of €618 (which comes to €18.54)

The total amount deducted from her annual income is:

€1,600 (income tax) + €386 (USC) = €1,986

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 the annual figure by 52.

A single taxpayer who earns €45,200 a year will have their tax calculated as follows:

The standard rate band for a single taxpayer is €44,000.

This means that the first €44,000 is taxed at the standard rate of tax, 20%, and the remainder (€1,200) is taxed at the higher rate of tax, 40%.
€44,000 x 20% = €8,800
€1,200 x 40% = €480
Total gross tax = €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 the:

• Single Person Tax Credit = €2,000
• Employee (PAYE) Tax Credit = €2,000
  Total tax credits = €4,000

In this example, the taxpayer is not entitled to any other tax credits.

Subtract the total tax credits to get the income tax due:

Gross tax of €9,280
Minus tax credits of €4,000
Tax due = €5,280

The Universal Social Charge (USC) is also payable on the gross income.

USC is calculated as follows:

• A rate of 0.5% on the first €12,012 (which comes to €60.06).
• 2% on the next €15,370 (which comes to €307.40).
• 3% on the balance (the amount over €27,382). 3% of €17,818 comes to €534.54.

USC = €60.06+€307.40+€534.54 = €902

The total amount deducted from income in the year is:

€5,280 (income tax) + €902 (USC) = €6,182

Tax allowances also reduce the amount of tax you have to pay. The amount a tax allowance reduces your tax by depends on how much income tax you pay at the highest rate of tax. This is because the allowance is subtracted from your income before tax is calculated.

See an explanation and example of how tax allowances are calculated.