## What PAYE means in Ireland
PAYE stands for Pay As You Earn. It is the mechanism Revenue uses to collect income tax from employees as they earn, rather than through an annual tax bill. Your employer acts as Revenue's collection agent, deducting tax each pay period and remitting it through PAYE Modernisation reporting.
Every employee taxed under PAYE has a Revenue Payroll Notification (RPN) issued to their employer. The RPN sets out the personal tax credits, the Standard Rate Cut Off Point (SRCOP), and the basis of taxation (cumulative, week 1, or emergency).
## The two tax rates in 2026
Ireland operates a two band income tax system for employees:
- 20 percent on income up to your SRCOP
- 40 percent on income above your SRCOP
For a single person on the standard credits, the SRCOP for 2026 is €44,000. Married couples and civil partners can have a higher combined SRCOP, depending on whether both partners earn.
## Tax credits reduce the tax due
Tax credits do not reduce your taxable income. They reduce the actual tax owed, euro for euro. The two near universal credits are:
- Personal Tax Credit: €2,000 per year for a single person
- Employee (PAYE) Tax Credit: €2,000 per year
A single PAYE employee starts with €4,000 of annual credits. Spread evenly that is roughly €76.92 per week or €333.33 per month.
## Worked example, single employee
Aoife earns €52,000 gross in 2026. She is single, taxed cumulatively, with €4,000 of credits and an SRCOP of €44,000.
| Step | Calculation | Result |
| --- | --- | --- |
| Tax at 20 percent | €44,000 x 20 percent | €8,800 |
| Tax at 40 percent | €8,000 x 40 percent | €3,200 |
| Gross tax | €8,800 + €3,200 | €12,000 |
| Less credits | €12,000 - €4,000 | €8,000 |
| Annual PAYE | | €8,000 |
Aoife's monthly PAYE deduction on a cumulative basis is approximately €666.67.
## Cumulative basis
Most employees are taxed cumulatively. This means each pay period, Revenue's allocation of credits and SRCOP from 1 January to date is compared against pay to date. Any over or under deduction from earlier periods is corrected automatically.
Cumulative basis is fair because it smooths out variable pay, bonuses, and starting mid year. If you joined an employer in April with no prior earnings in 2026, your first pay would benefit from the unused credits from January through March.
## What appears on your payslip
A typical Irish payslip will show:
- Gross pay
- PAYE (income tax)
- USC
- PRSI
- Pension contributions if any
- Net pay
The PAYE figure is the income tax for that pay period, calculated using the RPN data your employer received from Revenue.
## Checking your PAYE is correct
Cross check three things each period:
1. Are your tax credits on the payslip the same as those on your most recent Revenue myAccount summary
2. Is your SRCOP correct, especially after a marriage or job change
3. Is the basis correct, cumulative is normal, week 1 should usually be temporary
If figures look wrong, request an updated RPN through Revenue myAccount and your employer will pick it up at the next payroll run.
## When you might owe more or less
You can owe additional tax if you have non PAYE income such as rental profit, dividends above €5,000, or profit from a side business. You may be due a refund if you had emergency tax, started a new job mid year, or qualify for credits not yet reflected on your record (such as the Home Carer Credit).
A balancing statement (P21, now technically the Statement of Liability) issued through myAccount reconciles the year and confirms whether you owe or are owed.
## Educational guidance
This article explains how PAYE works in concept. It is not personal tax advice. Revenue.ie and your accountant remain the authoritative sources for your specific circumstances.