The net value of a once-off bonus after deductions.
Net bonus
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Total deductions
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Effective rate on bonus
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Your breakdown
Updates live as you type| Deduction on the €5,000 bonus | Amount |
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There is no special bonus rate in Ireland
The first thing to clear up is a myth. Ireland does not have a separate, punitive tax rate for bonuses. A bonus is taxed exactly like ordinary pay. What makes it feel as if it is taxed more harshly is that it lands on top of your salary, so every euro of it is charged at your marginal rates rather than your average rate. If your salary has already used up the cheap 20 percent band, the whole bonus is exposed to the 40 percent rate plus USC and PRSI, and that is why so much of it seems to disappear.
This calculator stacks the bonus on top of your base salary and works out the deductions that apply to the bonus slice specifically. It splits the bonus across the standard rate cut-off point if your salary plus bonus straddles it, charges USC at your top band rate, and adds PRSI at 4.1 percent. The result is the net amount you can actually expect to see in the payslip.
A €5,000 bonus on a €55,000 salary
Take a single employee on €55,000 who receives a €5,000 bonus. The salary already sits above the €44,000 standard rate cut-off, so the entire bonus is taxed at the 40 percent higher rate, which is €2,000 of income tax. USC on that income level is in the 3 percent band, so €150. PRSI at 4.1 percent is €205. Add those up and €2,355 is taken in deductions, leaving €2,645 in the hand. That is an effective rate of just over 47 percent on the bonus, even though the headline income tax rate is 40 percent, because USC and PRSI sit on top.
The €1,500 you can take tax-free
Before you accept that nearly half a bonus vanishes, there is a legitimate way to keep more of it, and it is one I point employers to often. The Small Benefit Exemption lets an employer give staff up to €1,500 a year in non-cash benefits, typically vouchers, completely free of tax, USC, and PRSI. It can be paid across a limited number of separate awards in the year. A cash bonus does not qualify, but if your employer is willing to structure part of the reward as a qualifying voucher, the first €1,500 escapes the deductions entirely. On the example above, shifting €1,500 of the €5,000 into a qualifying benefit would have saved roughly €700 in deductions.
Sweeping a bonus into your pension
The other lever is your pension. Routing a bonus into an occupational or personal pension as an additional voluntary contribution gets relief at your marginal rate, so a higher-rate taxpayer effectively avoids the 40 percent income tax on the amount paid in, though USC and PRSI still apply to it. For someone who does not need the cash immediately, sweeping a bonus into the pension is usually the most tax-efficient home for it.
Why was so much tax taken from my once-off bonus?
Payroll often taxes a one-off bonus in a single pay period, which can briefly push your USC or tax for that period higher than your steady-state rate, so the deduction looks alarming. Because Irish PAYE is cumulative across the year, any over-deduction usually evens out in later payslips or in your end-of-year balancing statement, so the figure on this tool reflects the true annual cost rather than the scary one-month snapshot.
Does a bonus push my whole salary into the higher rate?
No. Only the income above your standard rate cut-off is taxed at 40 percent, not your entire income. A bonus can push more of your total into the higher band, but it never re-rates the income you already earned at 20 percent. The tool shows this by taxing only the portion of the bonus that falls above the cut-off at the higher rate.