Gross to net pay in Ireland: how it works
Reviewed by Mellow Editorial Team, HR & payroll content team
Gross to net pay is the process of deducting income tax, USC and PRSI from an employee's gross salary to arrive at their take-home pay. In Ireland, this calculation runs through Revenue's PAYE system, and employers are legally responsible for getting it right on every payroll run.
The three deductions that reduce gross pay
Every Irish employee on Class A PRSI faces three statutory deductions.
Income tax is charged at 20% on earnings up to the standard rate cut-off point (roughly €44,000 for a single person in 2026/27) and at 40% on anything above that. Ireland does not use a personal allowance the way the UK does. Instead, each employee holds a Tax Credit Certificate (TCC) from Revenue, which lists their specific tax credits. Those credits are subtracted from the gross tax liability to produce the actual tax due. The personal tax credit and the employee tax credit are the two most common, but employees can hold others depending on their circumstances. The TCC is what makes two employees on the same salary end up with different tax bills.
USC (Universal Social Charge) applies to gross income above a low exemption threshold and is charged in bands: 0.5% on the first portion, then 2%, then 3%, rising to 8% on higher earnings. Unlike income tax, USC has no credit mechanism — the rates simply apply to the relevant band of income.
PRSI for Class A employees is charged at approximately 4.1% of gross pay. There is no credit here either; it is a straightforward percentage of earnings above a small weekly threshold.
The employer's share of PRSI
The figures above cover what the employee loses from their pay packet. But employers also pay PRSI on top of the gross wage. The employer Class A rate is approximately 11.15% of gross earnings. This is not a deduction from the employee — it is an additional labour cost the employer bears. When you are budgeting for a hire, the true cost of employment is the gross salary plus roughly 11.15% in employer PRSI, plus any pension contributions you are making.
How the calculation flows in practice
Take a straightforward example. An employee earns a monthly gross of €4,000.
1. Apply income tax at 20% to the portion within the standard rate band, 40% to any portion above it, then subtract the employee's tax credits from the result.
2. Apply USC across its bands to the full gross figure.
3. Apply 4.1% employee PRSI to the gross figure (above the relevant weekly threshold).
4. Add together the three deductions.
5. Subtract the total deductions from gross pay to get net pay.
The exact net figure depends on the employee's TCC — their credit entitlements, whether they have a reduced rate cut-off because of a second job, and whether any other deductions (such as a pension contribution or a bike-to-work scheme repayment) apply.
Pension auto-enrolment from 2026
Ireland's pension auto-enrolment scheme, My Future Fund, is being introduced in 2026. When it applies to your employees, there will be an additional employee pension contribution deducted from gross pay and a matching employer contribution on top. This will change the gross-to-net calculation for any enrolled employee and increase total employer costs. Employers should factor this into payroll setup now rather than treating it as a future problem.
Real-time reporting to Revenue
Ireland operates a real-time PAYE system. Every time you run payroll — weekly, fortnightly, or monthly — you must submit a Payroll Submission Request (PSR) to Revenue via ROS on or before the payment date. Revenue uses that submission to update each employee's tax position in real time. If you pay before you submit, you are non-compliant. There is no end-of-year reconciliation to fall back on in the way older systems worked; accuracy on each pay run matters.
The PSR records each employee's gross pay, the tax, USC and PRSI deducted, and the employer PRSI due. Revenue then calculates the monthly liability you owe, payable by the 23rd of the following month if you file online.
What employers need to keep in order
Before any gross-to-net calculation can happen correctly, you need a few things in place: the employee registered with Revenue and linked to your employer registration number, their current TCC pulled into your payroll software, and the correct PRSI class applied. Most employees in standard employment are Class A, but directors, proprietary directors and certain other categories have different classifications that change the rates. Getting the PRSI class wrong is one of the most common payroll errors in Irish businesses and can lead to significant back-payments.
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