Tax for Teens – Part 1: What Is Income Tax and Why Do We Pay It?

Welcome to the first instalment of Tax for Teens, a new blog series by Irish Tax Hub designed to explain the Irish tax system in a clear, simple way for secondary school students and young earners.

We often hear people say, "Why weren't we taught this in school?" — and when it comes to tax, they're absolutely right. Everyone who earns money in Ireland will deal with tax in one form or another. The earlier you understand the basics, the more confident and financially aware you’ll be - especially as you start earning your own income.

In this post, we’re starting from the very beginning: what is income tax, who pays it, and why does it matter?

What Is Income Tax?

Income tax is a type of tax that you pay to the government on the money you earn. This includes money from a job, self-employment, or other sources of income.

The government uses the money collected through income tax to fund public services and infrastructure. This includes:

• Schools and universities
• Hospitals and healthcare
• Roads and public transport
• Social welfare supports
• Gardaí and emergency services
• Housing and public amenities

In other words, income tax is one way that people contribute to the overall running of the country. If you're working and earning, you're helping to support these services — even if you're still a student.

Why Does the Government Need Your Tax?

Ireland, like every country, needs money to function. Tax is the government’s main source of income. Without it, we wouldn’t have access to basic public services like healthcare, education, or clean streets.

When people pay tax, they’re contributing to a system that benefits everyone. Think of it as a shared pot — everyone who earns money puts some of it in, and that money is then used to support society as a whole.

You might be thinking, “But I’m just a student with a summer job — why should I care about tax?” Here’s the thing: understanding tax early on helps you avoid overpaying, keeps you informed about your rights, and makes you more confident when you start earning regularly.

Who Has to Pay Income Tax?

In Ireland, income tax applies to everyone who earns income over a certain threshold — even teenagers. However, if you only earn a small amount, you may not have to pay any tax at all.

Whether you're working in a café on weekends, doing summer work, or earning online through freelancing or content creation, your income could fall under the tax net. The good news? The Irish tax system includes tax-free allowances — meaning you can earn up to a certain amount before you start paying tax. We’ll explain this in more detail in Part 2 of the series.

How Is Tax Paid?

There are two main ways people earn money — and how you pay tax depends on which applies to you:

1. PAYE (Pay As You Earn)

If you have a job with an employer (e.g. working in a supermarket, retail store, or café), you're likely on the PAYE system. This means your employer deducts tax, USC (Universal Social Charge), and PRSI (Pay-Related Social Insurance) from your wages before paying you. These deductions appear on your payslip.

For most teenagers in their first job, this will be the system you deal with. It’s fairly straightforward once you understand what’s on your payslip — and we’ll explain that in upcoming posts.

2. Self-Employed or Freelance Income

If you earn money outside of a traditional job — for example, tutoring, selling products online, dog walking, creating content on social media, or any other “side hustle” — you may be considered self-employed. In this case, it’s your responsibility to register with Revenue, track your income and expenses, and file a tax return.

You may not need to do this immediately — but it’s important to know the rules so you’re prepared if your income grows.

What Happens If You Don’t Understand Tax?

A lot of people end up paying too much or too little tax simply because they don’t understand the system. If you don’t give your employer the right information, you might end up on emergency tax - where you’re taxed at a very high rate until you sort it out. If you work multiple jobs or switch jobs during the year, you could miss out on tax credits unless you manage your Revenue account properly.

It might sound overwhelming now, but learning these basics early will help you avoid costly mistakes later — and maybe even get a refund.

What's Next?

In Part 2, we’ll cover:

• How much income you can earn tax-free in Ireland
• When teenagers actually need to start paying tax
• What to do when you get your first job
• A beginner's guide to payslips

We’ll also explain how to set up your MyAccount with Revenue and make sure you’re not overpaying.

Final Thoughts

Tax might seem complicated, but it doesn’t have to be. At Irish Tax Hub, we believe that financial education should start early — and understanding tax is a key part of that. Whether you're just starting your first job or earning some money on the side, knowing the basics will help you stay informed and in control.

Have questions, suggestions, or feedback? We’d love to hear from you - contact us today or message us on social media.