Quick answer
- PAYE is the system employers use to deduct Income Tax from employment or occupational-pension payments and send it to Revenue.
- The employer normally calculates PAYE from the Revenue Payroll Notification, which supplies the available tax credits, rate band and tax basis.
- Cumulative payroll looks at pay and tax from 1 January; Week 1 treats each pay period separately; emergency basis applies when no RPN is available.
- A bonus, second job, changed credits, new RPN or year-to-date correction can change PAYE even when basic salary has not changed.
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PAYE is a collection system, not an extra tax
PAYE means Pay As You Earn. The tax being collected is Income Tax. Your employer calculates the amount on each pay day, reports payroll to Revenue and pays the deducted amount over. PAYE is also used for occupational pensions.
USC and PRSI may be collected beside PAYE, but they are not part of the Income Tax calculation. This distinction matters when a person asks why a €4,000 tax-credit entitlement did not remove every payslip deduction.
From your Revenue record to the payslip
The 2026 PAYE calculation
For a single person without qualifying children, Revenue lists a €44,000 standard rate band for 2026. A common PAYE employee has a €2,000 Single Person Tax Credit and a maximum €2,000 Employee Tax Credit. Actual bands and credits depend on the Tax Credit Certificate.
| €50,000 taxable pay example | Calculation | Amount |
|---|---|---|
| Standard-rate portion | €44,000 × 20% | €8,800 |
| Higher-rate portion | €6,000 × 40% | €2,400 |
| Gross Income Tax | €8,800 + €2,400 | €11,200 |
| Less example credits | €2,000 + €2,000 | €4,000 |
| Illustrative annual PAYE | €11,200 − €4,000 | €7,200 |
This example excludes USC, PRSI, pension and other payroll deductions. It also assumes the full annual band and credits are available to this employment.
Cumulative, Week 1 and emergency basis
| Tax basis | How it works | What users often notice |
|---|---|---|
| Cumulative | Pay, tax bands and credits are accumulated from 1 January to the current pay day; tax already deducted is taken into account. | Unused credits can catch up, and a new RPN can create a payroll refund or extra deduction. |
| Week 1 / Month 1 | Each pay period is calculated on its own without carrying unused bands or credits forward. | Payroll cannot make a cumulative refund until Revenue issues a cumulative instruction. |
| Emergency | The employer applies emergency rules because no RPN is available. | Credits may be unavailable and more pay can reach the 40% rate; emergency USC can also apply. |
Do not use an old blog example to estimate emergency tax. Revenue publishes year-specific emergency rates and the result depends on whether a PPSN was supplied and how many emergency pay days have occurred.
Second jobs and split tax credits
Revenue can divide tax credits and the standard rate band between employments. Starting a second job does not create a second Personal Tax Credit or a fresh annual 20% band. If most credits remain on the first job, the second job can show higher PAYE even though the combined annual tax may be reasonable.
Employees can review and change the allocation through “Manage your tax for the current year” in myAccount. Moving credits can change cash flow between jobs but does not increase the household’s total entitlement.
Why PAYE changes and what to check
- Pay changed: bonus, overtime, arrears, back pay, unpaid leave or a taxable benefit altered taxable pay.
- Revenue details changed: a new RPN altered credits, rate band, job allocation or tax basis.
- Year-to-date correction: cumulative payroll collected an underpayment or refunded an overpayment.
- Employment changed: a new, ceased or second job changed the allocation.
- Pension changed: an approved contribution changed pay for Income Tax, though not necessarily USC or PRSI pay.
Compare the payslip with the current Tax Credit Certificate and the employer payroll submission in myAccount. Ask payroll about gross or taxable-pay inputs; ask Revenue about the credits, bands or basis supplied on the RPN.
Frequently asked questions
Is PAYE the same as Income Tax?
PAYE is the system used to collect Income Tax from employment and occupational-pension payments during the year.
What is an RPN?
A Revenue Payroll Notification gives an employer the tax credits, standard rate cut-off point, USC information and tax basis needed for payroll.
Why did my PAYE rise when my salary stayed the same?
A new RPN, changed tax-credit allocation, taxable benefit, cumulative correction, bonus or second employment can change PAYE without changing basic salary.
What is cumulative PAYE?
It calculates tax using income, credits, rate bands and tax already deducted from 1 January to the current pay date.
What does Week 1 basis mean?
Each pay period is treated separately, so unused credits and rate bands from earlier periods do not accumulate and payroll cannot make a cumulative refund.
When does emergency tax apply?
An employer must use emergency basis when no RPN is available, commonly because the employee has no PPSN on payroll or the employment is not registered with Revenue.
Does PAYE include USC and PRSI?
No. They appear alongside PAYE but use separate rules and are not reduced by Income Tax credits.
Who should I contact about incorrect PAYE?
Contact payroll if the pay details are wrong. Contact Revenue if the job, credits, rate band or tax basis on the RPN is wrong.
Sources & references
Related calculators
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