The remainder of your income is then taxed at the standard rate and, for any amount over the standard rate cut-off, the higher rate of tax. In effect, it is ‘taken off the top’ of your income. This is because the allowance is subtracted from your income before it is taxed. The amount by which a tax allowance will reduce your tax depends on what your highest rate of tax is.

Tax allowances reduce the amount of tax you must pay. If you sell assets such as property or shares you may have to pay Capital Gains Tax. If you get gifts or inheritances, you may have to pay Capital Acquisitions Tax. Money you get that is not liable to income tax may be liable to other taxes. Tax is payable on earnings of all kinds from your employment (including for example, bonuses, overtime, non-cash pay or benefit-in-kind). Under the PAYE system, income tax is charged on: Find out more about the Universal Social Charge. Unlike income tax, USC is not reduced by tax reliefs (except for certain capital allowances). Gross income is the total amount of your income before deductions such as pension contributions or PRSI are taken out. The Universal Social Charge (USC) is another tax on your income.

Tax on income that you earn from employment is deducted from your wages by your employer on behalf of Revenue. This page explains how tax rates and tax reliefs are used to calculate the tax you pay. However, there are income tax reliefs that reduce the amount of tax you have to pay.

Tax is charged as a percentage of your income, which is called the rate of tax. Nearly all income is taxable, also known as being liable to tax.

2021 al income tax brackets