Key facts at a glance
Statutory redundancy
Fully tax-free
No cap on this element
Basic Exemption
€10,160 + €765/yr
On ex-gratia payments
Lifetime cap
€200,000
Across all redundancy payments
Statutory redundancy pay in Ireland is fully tax-free, with no upper limit on that exemption, and is calculated as two weeks' pay per full year of service plus one bonus week, capped at €600/week. If your employer tops that up with an ex-gratia payment, that portion can use whichever gives you the biggest tax-free amount out of three Revenue reliefs: the Basic Exemption (€10,160 + €765 per year of service), the Increased Exemption (Basic + €10,000, conditions apply), or SCSB, subject to a €200,000 lifetime cap across all your redundancy payments.
The mistake people make isn't misunderstanding the statutory formula, it's assuming their whole ex-gratia top-up automatically gets one flat exemption. Revenue gives you a choice of three different reliefs, and which one is actually best for you depends heavily on your pay, your years of service, and whether you're in an occupational pension scheme. Below, we walk through how each relief works and which situations favour which one.
Work out your exact statutory entitlement before you read on.
Open the Redundancy Pay CalculatorHow statutory redundancy pay is actually calculated
Statutory redundancy uses a simple formula: two weeks' pay for every complete year of service, plus one additional bonus week, with weekly pay capped at €600 regardless of what you actually earn. You need at least 104 weeks of continuous service (two years) to qualify at all. For 10 years of service, that's 10 × 2 + 1 = 21 weeks, and at the €600 cap that comes to €12,600, entirely tax-free with no upper limit on the exemption itself.
Anything your employer adds beyond this statutory minimum is an ex-gratia payment, and it's that portion, not the statutory amount, where the three Revenue reliefs below come into play.
The three reliefs on an ex-gratia payment, and which one wins
Basic Exemption: €10,160 plus €765 for each complete year of service. Anyone can claim it, no conditions attached, and for shorter-service employees it's often the simplest and most straightforward option.
Increased Exemption: the Basic Exemption plus a further €10,000, but only if you haven't claimed a tax-free termination payment in the previous 10 tax years, and either you're not in an occupational pension scheme or you irrevocably give up your right to a lump sum from it. Giving up a pension lump sum for €10,000 of extra tax-free redundancy pay is a genuine trade-off that depends on your pension's value, not an automatic win.
SCSB (Standard Capital Superannuation Benefit): your average annual pay over the last 36 months, multiplied by complete years of service, divided by 15, minus any tax-free pension lump sum already received. SCSB scales with both pay and tenure, so it tends to be the most valuable relief for higher earners with long service, sometimes sheltering far more than the flatter Basic or Increased Exemption figures.
You're entitled to claim whichever of the three gives you the largest tax-free amount, not whichever your employer applies by default, so it's worth calculating all three before accepting a settlement figure.
Worked example: 12 years' service, €70,000 average pay
Statutory redundancy: 12 × 2 + 1 = 25 weeks at the €600 cap = €15,000, fully tax-free. Suppose the employer adds a further €20,000 ex-gratia on top. The Basic Exemption gives €10,160 + (€765 × 12) = €19,340 tax-free on the ex-gratia portion. SCSB gives (€70,000 × 12) ÷ 15 = €56,000, far higher, and since that comfortably covers the whole €20,000 ex-gratia payment, choosing SCSB over the Basic Exemption means the entire €20,000 top-up is tax-free too, on top of the already tax-free €15,000 statutory amount. Total package: €35,000, entirely tax-free, purely from picking the right relief.
Run your own redundancy payment through the calculator
Combine any taxable portion with your normal salary to see the real PAYE, USC, and PRSI impact for the year.
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Frequently asked questions
Is redundancy pay taxed in Ireland in 2026?
Statutory redundancy pay itself is completely tax-exempt, with no upper limit on that exemption. Where tax comes in is any ex-gratia payment your employer adds on top of the statutory minimum: that portion can use whichever is highest of three Revenue reliefs, the Basic Exemption, the Increased Exemption, or the Standard Capital Superannuation Benefit (SCSB), subject to an overall lifetime cap of €200,000 across all your redundancy-related payments. Anything above the relief you're entitled to is taxed as ordinary income through PAYE, USC, and PRSI.
How much statutory redundancy pay will I actually get in Ireland?
The formula is two weeks' pay for each complete year of service, plus one bonus week, with weekly pay capped at €600 even if you earn more. You need at least 104 weeks (two years) of continuous service to qualify. For example, 10 years of service works out to 10 × 2 + 1 = 21 weeks, capped at €600/week, giving €12,600. This statutory amount is entirely tax-free regardless of how large it is.
What's the difference between the Basic Exemption and the Increased Exemption?
The Basic Exemption shelters €10,160 plus €765 for each complete year of service from tax on your ex-gratia payment, and anyone can claim it. The Increased Exemption adds a further €10,000 on top of the Basic Exemption, but only if you haven't claimed a tax-free termination payment in the previous 10 tax years, and either you're not in an occupational pension scheme or you irrevocably give up your right to a lump sum from it. Giving up a pension lump sum to gain €10,000 of extra tax-free redundancy pay is a real trade-off worth running the numbers on rather than assuming it's automatically worth it.
What is SCSB and when is it worth more than the other exemptions?
The Standard Capital Superannuation Benefit is calculated as your average annual pay over the last 36 months, multiplied by your complete years of service, divided by 15, minus any tax-free pension lump sum you've already received or are entitled to. SCSB tends to be the most valuable relief for higher earners with long service, since it scales directly with both pay and tenure rather than the flatter per-year amounts the Basic and Increased Exemptions use. You're entitled to claim whichever of the three reliefs, Basic, Increased, or SCSB, gives you the largest tax-free amount, not whichever your employer defaults to.
Is there a lifetime cap on tax-free redundancy payments in Ireland?
Yes, €200,000 across all redundancy and termination-related payments over your working life, regardless of which exemption you use or how many separate redundancies you've been through. If you've claimed tax-free termination payments before, whatever you've already used counts against this lifetime cap the next time you're made redundant, which is part of why the Increased Exemption's 10-year lookback question matters.
Does PRSI apply to the taxable part of a redundancy payment?
No, genuine redundancy and termination payments are exempt from PRSI even on the portion that's taxable for Income Tax and USC purposes, since PRSI generally only applies to employment income, not compensation for loss of employment. Note that Ireland's PRSI rate on ordinary employment income rises from 4.2% to 4.35% from 1 October 2026, which matters for your regular salary and any final salary payments bundled into the same payslip, but not for the redundancy compensation itself.
Do I pay tax on unused annual leave included in my final payment?
Yes, in full. Payment for accrued but untaken annual leave is treated as ordinary employment income, subject to PAYE, USC, and PRSI exactly like a normal salary payment, and it does not benefit from the Basic Exemption, Increased Exemption, SCSB, or the statutory redundancy tax exemption. Employers often pay it in the same final payslip as redundancy compensation, which can make the total figure look more generously tax-free than it actually is.
How do I work out my actual take-home from a redundancy payment in Ireland?
Add the taxable portion of your ex-gratia payment (after applying whichever of the Basic Exemption, Increased Exemption, or SCSB gives you the best result) to your normal salary for the year, then run the combined figure through the Ireland Salary Calculator to see the real PAYE, USC, and PRSI impact. Because Revenue applies the exemption to the ex-gratia amount specifically, not your whole redundancy package, it's worth separating out the statutory (always tax-free), ex-gratia (relief-eligible), and any notice or holiday pay (always fully taxable) components before doing the sum.
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