Ireland and US Taxes: What American Expats Need to Know

Ireland taxes residents on worldwide income at rates up to 40%, plus the Universal Social Charge (USC) and PRSI social insurance, which can push the effective marginal rate significantly higher on upper income. The US-Ireland tax treaty provides protections for pensions, dividends, interest, and royalties, and the Foreign Tax Credit typically eliminates most US tax on Irish wages. Ireland's pension system uses occupational schemes, PRSAs, and ARFs, and how the IRS treats these accounts depends on whether treaty protections apply and the specific type of account. A US-Ireland totalization agreement exists, so most employed US citizens in Ireland pay PRSI rather than US Social Security contributions. US expats investing locally should avoid Irish-domiciled ETFs and investment funds, as these almost certainly qualify as PFICs and will be taxed at harsh rates on gains and distributions.