Calculating your Income Tax
What is a tax rate band?
A tax rate band is the amount of income which will be taxed at a particular percentage (tax rate). The current tax rates are 20% and 40%.
Standard rate of tax
Your income up to a certain limit is taxed at the ‘standard rate’ of Income Tax, which is currently 20%. This is known as the standard rate band.
Higher rate of tax
Any income above your standard rate band is taxed at the higher rate of Income Tax, which is currently 40%.
What is your rate band?
The amount of your tax rate band is dependent on your personal circumstances. For example, whether you are:
You can find a list of the tax rate bands for this year and the previous four years in the Tax rates, bands and reliefs chart.
How rate bands work
If you are an employee, then your tax rate band will be shown on your Tax Credit Certificate. Your employer will use this to calculate the amount of tax to deduct from your weekly or monthly pay.
Under the Pay As You Earn (PAYE) system, tax rate bands are spread evenly throughout the year. If you are working for the full year, depending on how often you get paid your tax rate bands will be divided as follows:
- 52 equal weekly amounts if you are paid weekly
- 26 equal fortnightly amounts if you are paid fortnightly
- 12 equal monthly amounts if you are paid monthly
- 13 equal amounts, if you are paid every four weeks.
If you have a second or multiple jobs, you can divide your rate band between them.
Unused rate bands
You cannot get a refund of any unused tax rate bands and you cannot carry them over into another tax year.
- Example 1
In 2025, Ann is single and earns €900 per week.
Because Ann is single, she has a standard rate band of €44,000 per year. The weekly amount is €846.16 (€44,000÷52).
This means that the first €846.16 of Ann’s wages is taxed at the standard rate of 20%. The balance of €53.84 (€900 - €846.16) is taxed at the higher rate of 40%.
Ann's tax liability (before tax credits, allowances and reliefs)
| Description | Amount of wage | Calculation | Tax |
|---|
| Single rate band |
€846.16 |
€846.16 at 20% |
€169.23 |
| Balance |
€53.84 |
€53.84 at 40% |
€21.54 |
Ann will also have tax credits, allowances and reliefs applied to her earnings.
- Example 2
In 2025 Colin is single and earns €800 per week.
Because Colin is single, he has a standard rate band of €44,000 per year. The weekly amount is €846.16 (€44,000÷52).
The standard rate of 20% is applied to his income up to the limit of the rate band. Colin’s income is less than the limit of his standard rate band, therefore the standard tax rate is applied to €700.
He does not pay tax at the higher rate of 40%.
Colin's tax liability (before any tax credits, allowances and reliefs)
| Description | Amount of wage | Calculation | Tax |
|---|
| Single rate band |
€700 |
€700 at 20% |
€140 |
| Balance |
€0 |
(no balance to calculate) |
€0 |
- Example 3
In 2025 Aoife is single and earns €4,000 per month.
As Aoife is single, she has a standard rate band of €44,000 per year.
The monthly amount is €3,666.67 (€44,000÷12).
This means that the first €3,666.67 of Aoife's wages will be taxed at the standard rate of 20%. The balance of €333.33 (€4,000 - €3,666.67) is taxed at the higher rate of 40%.
Aoife's tax liability (before tax credits, allowances and reliefs)
| Description |
Amount of wage |
Calculation |
Tax |
| Single rate band |
€3,666.67 |
€3,666.67 at 20% |
€733.33 |
| Balance |
€333.33 |
€333.33 at 40% |
€133.33 |
Aoife will also have tax credits, allowances and reliefs applied to her earnings.
What is an increased rate band?
In 2025, the standard (20%) rate band for couples in a marriage or civil partnership is €53,000. If both people are working it is increased by the lower amount of either:
- €35,000
- or
- the income of the lower earner.
This means that the maximum standard rate band a couple can have is €88,000 (€53,000 + €35,000). It is not possible for one person to use the full amount of €88,000.
An individual can have no more than €53,000, unless they have additional reliefs such as:
Note
The increase in the standard rate band is not allowable during the tax year where a couple are claiming the Home Carer Tax Credit.
- Example 4
Sarah and Alex are PAYE employees. They are married and are taxed under joint assessment. Sarah's annual income is €71,000. Alex is the lower earner and has an annual income of €22,500.
Because both Sarah and Alex are working, they are due the increased rate band. It is increased by Alex’s income. This is because his income is lower than €35,000.
Sarah and Alex's rate band is €75,500 (€53,000 + €22,500).
- Example 5
Oonagh and Donna are PAYE employees. They are in a civil partnership and are taxed under joint assessment. Oonagh's annual income is €54,000. Donna is the lower earner and has an annual income of €35,300.
Because both Oonagh and Donna are working, they are due the increased rate band. It is increased by €35,000. This is because, the lower income (€35,300) is higher than €35,000.
Oonagh and Donna's rate band is €88,000 (€53,000 + €35,000).
Please see Tax rates, bands and reliefs charts about how your rate band could be increased.
Next: How tax credits work