How Does Tax Work in Ireland? Tax System Explained 2025
Understanding how tax works in Ireland helps you know whether you're paying the right amount—and whether you might be owed money back. Most PAYE workers have tax deducted automatically, but that doesn't mean it's always correct.
Our specialists review tax for thousands of workers each year, finding an average refund of €1,080. Here's how the Irish tax system works.
📊 Irish Tax System Overview
Income Tax Rates
Ireland has two income tax rates:
Tax Credits
Tax credits directly reduce your tax bill. Most people receive:
- Personal Tax Credit: €2,000
- Employee Tax Credit: €2,000 (PAYE workers)
- SPCCC: €1,900 (single parents)
A single PAYE worker typically has €4,000 in annual tax credits, meaning they pay no tax on the first €20,000 of income (€4,000 ÷ 20%).
How PAYE Works
PAYE (Pay As You Earn) is the system where tax is deducted from your wages by your employer. Revenue sends your employer instructions on how much to deduct based on your tax credits and rate band.
Problems arise when:
- Emergency tax is applied (no instructions)
- Credits aren't split correctly between multiple jobs
- You haven't claimed available reliefs
💡 Example Tax Calculation
Single person earning €45,000:
• First €44,000 @ 20% = €8,800
• €1,000 @ 40% = €400
• Total tax = €9,200
• Less credits (€4,000) = €5,200 income tax
Additional Reliefs You Can Claim
Beyond your basic credits, you may be entitled to:
- Rent tax credit – up to €1,000/year
- Medical expenses – 20% relief
- Flat rate expenses – for many professions
- WFH relief – for remote workers
The average refund our clients receive is €1,080.
Check Your Tax
Our experts will review your tax and find every refund you're owed.
Start Your Tax Review →No refund, no fee • Average refund €1,080 • TAIN: 77632V
Frequently Asked Questions
Do I need to file a tax return?
Most PAYE workers don't have to file, but you should if you want to claim reliefs or check for overpayments.
How do I know if I'm on the right tax rate?
Check your payslip for your tax credits and rate band. Our specialists can review this and identify any issues.
How far back can I claim?
Four years. In 2025, you can claim for 2021, 2022, 2023, and 2024.