Net Profit
€75,000.00
Total Tax
€27,102.86
After-Tax Income
€47,897.14
Sole Trader Tax in Ireland
As a sole trader, your business profit is taxed as personal income. You pay Income Tax (20%/40%), USC, and PRSI Class S at 4%. You can deduct legitimate business expenses including cost of goods, rent, utilities, and professional services.
Earned Income Tax Credit
Self-employed sole traders can claim the Earned Income Tax Credit of up to EUR 1,875 (2025), which reduces your income tax bill. This is in addition to the personal tax credit of EUR 1,875.
Revenue-Aligned: Uses 2025-26 Irish tax rates, USC bands, and PRSI Class S rate.
How sole traders are taxed and what makes them different from companies
What is a sole trader in Ireland?
A sole trader is the simplest way to run a business. You and your business are legally the same thing. You keep all the profits, but you are also personally responsible for all debts. There is no registration fee and you do not need to file company accounts. You just register for tax with Revenue using a TR1 form and start trading.
What taxes does a sole trader pay?
Sole traders pay Income Tax (20% on the first €42,000, 40% above), PRSI Class S (4%), and USC (0.5% to 8% in tiers). On €40,000 profit, your total tax is roughly €8,000 to €9,000. On €80,000 profit, it rises to about €26,000 to €28,000. You also pay preliminary tax in advance each October.
What tax credits do sole traders get?
You get the Personal Tax Credit of €1,875 and the Earned Income Tax Credit of €1,875, giving you €3,750 in total credits. If you are married and jointly assessed, your spouse’s credits may also apply. These credits reduce your Income Tax bill directly. You may qualify for additional credits like the Home Carer Credit or Age Credit.
How do I register as a sole trader?
Fill in the TR1 form on Revenue Online Service (ROS) or download a paper version from revenue.ie. You need your PPSN, your business details, and your estimated income. Revenue will set you up for Income Tax, PRSI, and USC. If your turnover will exceed €42,500 (services) or €85,000 (goods), also register for VAT on the same form.
Do sole traders need to keep accounts?
Yes. You must keep records of all income and expenses for at least 6 years. You do not need formal audited accounts like a company, but you need enough detail to complete your Form 11 tax return. Many sole traders use simple accounting software or spreadsheets. Keeping receipts and bank statements organised saves time and money at year-end.
When does it make sense to become a company instead?
Generally, when your profits regularly exceed €80,000 to €100,000. A company pays 12.5% corporation tax on trading profits versus up to 55% for a sole trader. But a company has higher running costs: annual CRO filing (€20), possible audit fees, and extracting money via salary or dividends creates extra tax. Get advice from an accountant before switching.
What is the difference between turnover and profit?
Turnover is your total sales or revenue before any deductions. Profit is what is left after you subtract all business expenses. You pay tax on your profit, not your turnover. For example, if your turnover is €60,000 and your expenses are €15,000, your taxable profit is €45,000. This is why tracking expenses carefully is so important for sole traders.
Revenue-Aligned: Based on 2025 Revenue rates and thresholds. For personal advice, speak to a qualified tax adviser.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms
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