How the rates really work
You pay 20% on income up to your standard rate cut-off point (€44,000 for a single person in 2026, rising to €46,500 in 2027 under the Budget 2027 plans) and 40% only on income above it. USC works in slices too, from 0.5% to 8%. PRSI is a flat rate on all your pay.
Example: a single person’s pay rise from €43,500 to €44,500
- €500 is taxed at 20%: €100
- €500 is taxed at 40%: €200
- USC at 3% on the €1,000: €30
- PRSI on the €1,000: about €42 (4.2% for most of 2026, 4.35% from October)
You keep about €628 of the €1,000. Your pay below €44,000 is taxed exactly as before, and your tax credits don’t change.
| Part | Amount |
|---|---|
| You keep | €627.62 |
| Income tax | €300.00 |
| USC | €30.00 |
| PRSI | €42.38 |
| The pay rise | €1,000.00 |
Only the €500 above €44,000 is taxed at 40%. The pay you already had is taxed exactly as before.
Why the myth sticks
Moving into the higher rate is a big jump, from keeping about 73c of each extra euro to about 53c. A first payslip after a rise can also look odd if your tax credits haven’t been updated, or if a bonus or back pay lands in one month. But your total take-home pay still goes up. The salary calculator shows how much of every extra €100 you keep.
The real exceptions
Some things stop completely at an income limit: a cliff. A rise that takes you just over one can leave you worse off overall:
- The USC exemption. If your income is €13,000 or less, you pay no USC. One euro more, and USC is due on all of it: about €80 a year. A rise of less than about €80 just over the line leaves you worse off.
- Reduced USC for medical card holders and people aged 70 or over. The lower rates stop at €60,000. Going €1 over costs about €313 more USC a year.
- Medical card income limits.
- SUSI student grants, where a small rise in family income can drop you to a lower grant band.
- Some local authority housing limits.
Payments that taper gradually, like the Working Family Payment, reduce what you keep from a rise but don’t leave you worse off. If you’re near a cliff, check how that limit measures your income before you plan around it. USC, for example, is charged on your pay before pension contributions, so paying more into a pension won’t get you back under a USC limit.