How has James Joyce contributed to modern literature?

James Joyce is primarily remembered for his pioneering use of the epiphany and for his highly subjective, stream-of-consciousness writing style.
Used in his early (1914) collection of short stories called The Dubliners, an epiphany is a sudden moment of revelation on the part of the main character and becomes the climax of the story. Once the main character has had an inward realization that he has been perceiving life through the veil of illusion, the transformation occurs and the story can end. This is different from the traditional Victorian tale in which, typically, an outward manifestation of change must show: for example, in Dickens's A Christmas Carol, the story doesn't end with Scrooge having an inward realization of his miserly living and seeing the light, but with examples of how this change manifests itself in how Scrooge lives thereafter. For example, Scrooge generously helps his employee's impoverished family after his epiphany. In Joyce, however, it is the epiphany that is all important. For this reason, vis-a-vis more traditional short stories, his can seem to end quite abruptly.
Joyce is also famous for stream-of-conscious, in which readers are taken inside the heads of the main characters, following their jumble of sometimes chaotic thoughts as they go through the routines and rituals of everyday life. This can be disorienting for readers used to a more traditional narrative in which the normative (or "normal") voice of a narrator sets the scene, offering us comfort and context. Yet, as with Virginia Woolf, Joyce is struggling to break past the facade of surface reality and describe the reality of life as it is experienced internally in an often fragmented way by an individual.

James Joyce is regarded as the most inventive writer of modernist literature. He not only used the stream-of-consciousness method that was popular among his contemporaries in Ulysses, his best-known novel, he also wrote Finnegan's Wake, an entire novel written in a language that he invented.
The stream-of-consciousness narrative was also used by Virginia Woolf and, later, William Faulkner. However, Joyce took it further by including Stephen Dedalus's many impressions of Dublin life, as well as disruptions in his thoughts and vulgar thoughts. Ulysses was banned in the United States during the 1920s on the grounds that it was obscene. The United States Postal Service burned copies of the novel. Other modernist authors, such as Hemingway, depicted sexuality in their works, but they never wrote about it directly—Joyce did.
Joyce is an important modernist writer due to his mastery of language, his willingness to write about aspects of life that previously went undiscussed, and his varied use of stream-of-consciousness.
https://www.britannica.com/biography/James-Joyce