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Calculating your Income Tax

  1. Overview
  2. How your Income Tax is calculated
  3. What is the difference between gross and taxable pay?
  4. What is a tax rate band?
  5. What is an increased rate band?
  6. How tax credits work
  7. What is a Tax Credit Certificate?
  8. View your pay and tax details

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 2023, Ann is single and earns €800 per week.

    Because Ann is single, she has a standard rate band of €40,000 per year. The weekly amount is €769.23 (€40,000/52).

    This means that the first €769.23 of Ann’s wages is taxed at the standard rate of 20%. The balance of €30.77 (€800 - €769.23) is taxed at the higher rate of 40%.

    Ann's tax liability (before tax credits, allowances and reliefs)
     DescriptionAmount of wageCalculationTax
    Single rate band €769.23 €769.23 x 20% €153.85
    Balance €30.77 €30.77 x 40% €12.30

    Ann will also have tax credits, allowances and reliefs applied to her earnings.

  • Example 2

    In 2023 Colin is single and earns €370 per week.

    Because Colin is single, he has a standard rate band of €40,000 per year. The weekly amount is €769.23 (€40,000/52).

    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 €370.

    He does not pay tax at the higher rate of 40%.

    Colin's tax liability (before any tax credits, allowances and reliefs)
     DescriptionAmount of wageCalculationTax
    Single rate band €370 €370 x 20% €74
    Balance €0 (no balance to calculate) €0

Next: What is an increased rate band?

Published: 03 February 2023 Print this page

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