What the scheme is
The Cycle to Work scheme is a tax efficient way to buy a bicycle and safety equipment for commuting to work. The employer purchases the bike, the employee repays through salary sacrifice over up to 12 months, with no PAYE, USC, or PRSI on the deductions.
2026 limits
| Bike type | Maximum cost | | --- | --- | | Standard pedal bike | €1,250 | | Electric bike (pedelec) | €1,500 | | Cargo or e cargo bike | €3,000 |
Refresh cycle
Each employee can use the scheme once every four years. The countdown starts from the tax year of purchase. So a 2026 purchase means the next eligible year is 2030.
What you can buy
- The bicycle itself
- Helmet
- Lights and reflective gear
- Locks
- Mudguards, panniers, racks
- Bell, pump
- Reflective clothing
You cannot include accessories not directly safety related (e.g. cycling computers).
How the salary sacrifice works
- Employer purchases the bike (often through a scheme provider)
- Employee receives the bike
- Employee's gross pay is reduced over up to 12 months by the cost
- Reduction is before PAYE, USC, and PRSI
Worked example
Aoife earns €60,000. She buys an e bike worth €1,500 over 12 months.
- Monthly deduction from gross pay: €125
- Her marginal rate is 40 percent income tax plus 3 percent USC (the band running from €28,700 to €70,044) plus 4.2 percent PRSI, so 40 + 3 + 4.2 = 47.2 percent
- Tax saved: €125 x 47.2 percent = €59 per month
- Net cost: €66 per month, total €792 over 12 months
- Saving: €708 across the year
The 52 percent often quoted for this scheme is the marginal rate for someone earning above €70,044, where USC is 8 percent rather than 3 percent. It is a real figure for a different person. Used at €60,000 it overstates the saving by €72 a year. Employee PRSI rises to 4.35 percent on 1 October 2026, which takes the marginal rate at this salary to 47.35 percent.
Effect on payslip
You will see the deduction on your payslip as "Cycle to Work" or similar. Gross pay drops by the agreed amount each month. Net pay drops by less because tax savings reduce the impact.
Eligibility
To qualify:
- The bike must be primarily used to cycle to or from work, or between work locations
- The employer must operate the scheme
- The salary sacrifice must be a genuine reduction, not a top up
Effect on pension and PRSI history
Salary sacrifice reduces the gross pay used for some calculations, including pension contributions and possibly PRSI insurable weeks at very low pay. Consider these effects before sacrificing a large amount.
Educational notice
This article is general guidance. Always check current scheme limits with Revenue.ie before entering an agreement.