Why this credit exists
The Employee PAYE Tax Credit recognises that employees pay tax through real time payroll deduction, while self employed taxpayers pay only after year end. It also acknowledges the difference in cost deductibility between the two groups.
In 2026 the credit is €2,000 per year for each employee.
Who qualifies
You qualify if you:
- Have employment income subject to PAYE
- Are not a proprietary director of your own company in respect of income from that directorship. A proprietary director is one who owns or controls, directly or indirectly, more than 15 percent of the ordinary share capital - not a controlling stake
- Receive certain Department of Social Protection payments such as Illness Benefit and Jobseeker's Benefit
The credit applies per employee, not per job. A worker with two PAYE jobs still gets €2,000 in total, not €4,000.
How it appears on a payslip
Combined with the Personal Tax Credit, the standard credit allocation for a single PAYE worker is:
- Weekly total: €76.92
- Monthly total: €333.33
If you have a second job, your credits will typically be allocated to your main employer with secondary employment taxed at standard or marginal rate.
Worked example
Aoife earns €40,000 in 2026.
- Income tax at 20 percent on €40,000 = €8,000
- Less Personal Tax Credit = €2,000
- Less Employee PAYE Credit = €2,000
- Annual PAYE = €4,000
Without the Employee PAYE Credit, Aoife would pay €6,000.
Self employed comparison
Self employed people receive the Earned Income Credit instead. In 2026 this is also €2,000, bringing parity that previously did not exist.
Mixed income workers receive the higher of the two credits, not both. The combined cap prevents double counting.
Restrictions
You cannot claim the Employee PAYE Credit on:
- Investment income (rental, dividends, deposit interest)
- Trading profits as a sole trader
- Pension income (a separate credit may apply)
- Maintenance payments received
Year of joining or leaving employment
The credit is not apportioned by the number of weeks you worked, so joining or leaving mid year does not cost you part of it. It is restricted by the amount of PAYE income instead.
Where your PAYE income for the year is below €10,000, the credit is capped at 20 percent of that income. A mid year joiner with €6,000 of PAYE income gets 20 percent of €6,000 = €1,200, not the full €2,000. At €10,000 of PAYE income the cap and the credit meet, and above that the full €2,000 is available. This is the same shape of restriction the Earned Income Credit applies to low self employed profits.
Educational notice
This article is general information for 2026. Always check Revenue.ie for the latest credit values and detailed eligibility rules.