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A bonus is not a separate tax category — it is simply added to your annual earnings and taxed through the same payroll system that handles your salary. This means the tax you pay on a bonus depends on how much you already earn, where your tax credits are allocated, and which USC and PRSI bands apply.
When a bonus is paid through Irish payroll, three deductions potentially apply:
The combined marginal rate on a bonus can reach 52% (40% PAYE + 8% USC + 4% PRSI), but few people pay this on their entire bonus. The effective rate — total tax divided by bonus amount — is usually much lower, especially for smaller bonuses that fall within the standard rate band.
The key insight is that a bonus is stacked on top of your base salary. If your salary already uses up the standard rate band (€44,800 for a single person in 2026), the entire bonus is taxed at 40% PAYE — plus USC and PRSI.
Example: A single person earning €50,000 base salary with a €10,000 bonus. The salary occupies the full standard rate band, so the €10,000 bonus is entirely at 40% PAYE. USC tops out at 8% on the portion above €70,044 total earnings. The effective rate on this bonus might be around 48%.
For a lower earner with headroom in the standard rate band, the bonus may be partially or fully taxed at 20% PAYE, resulting in a much lower effective rate. Use the bonus calculatorto see your exact position.
These two terms are frequently confused. The marginal rate is the tax paid on the next euro of bonus income. If you are already in the 40% PAYE bracket, your marginal rate is the full 52% stack (40% PAYE + 8% USC + 4% PRSI).
The effective rate divides the total extra tax caused by the bonus by the bonus amount. Because tax credits and the standard rate band may have already been consumed by your salary, the effective rate can actually be higherthan the marginal rate in some scenarios — especially when USC is recalculated on total annual earnings.
The calculator shows both: the headline effective rate and the detailed breakdown of PAYE, USC and PRSI changes caused by the bonus.
The two most common approaches to reduce the overall tax burden on a bonus are:
No. A bonus is ordinary employment income and is taxed through the same PAYE/USC/PRSI system. The perceived difference comes from the bonus being “stacked” on top of your salary, so it often falls into a higher tax bracket.
It is the combined marginal rate of 40% PAYE + 8% USC + 4% PRSI. Most people do not pay 52% on the whole bonus, only on the portion above the relevant thresholds.
Yes, if you are in Class A PRSI. Employee PRSI is 4% on all earnings with no upper ceiling. Employer PRSI (11.05%) also applies on the bonus amount.