Total tax on self-employed profit.
Total tax + USC + PRSI
—
Income tax
—
USC
—
After tax
—
Your breakdown
Updates live as you type| Charge | Amount |
|---|
Three taxes sit on every euro of profit
A sole trader does not pay one tax. You pay three, and they all land on the same profit figure. Income tax runs at 20 percent up to your standard rate band of 44,000 euro and 40 percent above it. The Universal Social Charge climbs through its own bands on top. Class S PRSI adds a flat 4.1 percent. This calculator stacks all three so the number you see is the real cost of being your own boss, not just the income tax slice that gets quoted most often.
Self-employed people get the same 2,000 euro personal tax credit as everyone, plus a 2,000 euro earned income credit that stands in for the PAYE credit an employee receives. Those two credits, worth 4,000 euro together, come straight off the income tax before it is added to USC and PRSI.
Following 75,000 euro of profit through the system
Take a freelancer with 75,000 euro of net profit after expenses. The first 44,000 euro is taxed at 20 percent and the remaining 31,000 euro at 40 percent, giving 21,200 euro of income tax before credits. Subtract the 2,000 euro personal and 2,000 euro earned income credits and the income tax falls to 17,200 euro. USC adds 2,044 euro across its bands, and PRSI is 4.1 percent of the full profit, or 3,075 euro.
That total is roughly 30 percent of profit, which is the rule of thumb worth burning into memory: on profit in this range, set aside about a third for the Revenue bill. The chart shows how the 22,319 euro total breaks down by charge.
The surcharge and the minimum that catch high and low earners
Two edges of this system surprise people. At the top, profit above 100,000 euro carries an extra 3 percent USC surcharge that applies only to the self-employed, so a consultant on 140,000 euro pays an additional 1,200 euro on the slice above the threshold that an employee on the same income would not. At the bottom, Class S PRSI has a 500 euro annual minimum, so once profit clears 5,000 euro you pay at least 500 euro even if 4.1 percent of profit would be less. That minimum still buys a full year of social insurance contributions, which counts toward the State Pension.
A practical habit that saves real money: pay an accountant to confirm your expense claims in year one. New traders routinely under-claim on things like a portion of home broadband, professional subscriptions, and accountancy fees, and over-claim on entertainment, which is not deductible. Getting the expense base right shifts the profit figure this tool starts from, and that flows through all three taxes at once.
Questions sole traders ask
Why is my effective rate lower than 52 percent?
Because the 52 percent figure is the marginal rate, the rate on your last euro, not your average. The first 44,000 euro is taxed at 20 percent and USC starts low, so the blended rate on 75,000 euro of profit works out near 30 percent. Only once profit climbs well into six figures does the average rate approach the marginal rate.
Do I pay this all at once?
You pay it through self-assessment. By 31 October you settle the balance for the prior year and pay preliminary tax for the current year, which is usually 90 percent of the current year liability or 100 percent of the prior year. Filing through ROS pushes the deadline to mid-November.
Should I incorporate to cut this bill?
Possibly, but not for the reason most people assume. A company does not magically lower the tax on money you take out to live on. It helps mainly when you can leave profit inside the company to reinvest. Compare both routes on real numbers before paying for incorporation.