Introduction to income tax credits and reliefs
Tax reliefs reduce the amount of tax that you have to pay. The tax reliefs to which you are entitled depend on your personal circumstances.
How tax credits work
Tax is calculated as a percentage of your income. Your tax credits are deducted from this to give the amount of tax that you have to pay. A tax credit has the effect of reducing your tax by the amount of the credit.
Everyone is entitled to a personal tax credit. There are personal tax credits for single people, people who are married or in a civil partnership and people who are widowed or are surviving civil partners. If you are in employment, getting a pension or getting a taxable social welfare payment (such as Jobseeker’s Benefit) you are also entitled to the Employee Tax Credit (formerly known as the PAYE tax credit) of €1,650.
So, for example, if you are single and in employment you are entitled to an annual tax credit of €1,650 and the Employee Tax Credit of €1,650. This means that when the total amount of tax you owe is calculated, €3,300 will be deducted from this. In effect, this means that if you earn €16,500 or less you do not pay any income tax (because your tax credits of €3,300 are more than or equal to the amount of tax you are due to pay). However you may be liable to pay Universal Social Charge (if your income is over €13,000 and PRSI (depending on how much you earn each week).
If you are married or in a civil partnership, you have the option of sharing tax credits and tax bands between you and your spouse or civil partner. If one spouse or civil partner works in the home caring for one or more dependent people you may be able to claim a Home Carer Tax credit. You can read more about taxation of married people and civil partners.
How tax allowances work
In some cases you can get a tax refund for specific expenses, for example, medical expenses or mortgage interest.
The value of a tax allowance will depend on whether it is allowed at the highest rate of income tax that you pay or is restricted to the standard 20% rate. Take the example of a claim of €100. If you pay tax at 40% and you can claim it at this rate, then it will reduce your tax by €40 (€100 x 40%). If the highest rate of tax that you pay is 20%, or the relief is restricted to the standard rate, then the claim of €100 will reduce your tax by €20 (€100 x 20%).
More information about how tax credits and allowances work is available in our document about how your income tax is calculated.
Tax credits and allowances for specific circumstances and groups
If you are caring for a dependent child on your own you can claim the Single Person Child Carer Credit in addition to your personal tax credit. There is also an increase in your standard rate tax band. This means that you can earn more before you start to pay the higher rate of tax.
If you are aged 65 or over, you are liable to pay income tax in the normal way. However, there are tax exemption limits for people aged 65 or over and there are some extra tax credits. It is possible to get tax relief for covenants to people aged 65 and over. In certain circumstances, you may be able to reclaim any DIRT (Deposit Interest Retention Tax) paid.
Find out more about tax reliefs for older people.
Employment-related tax reliefs
Contributions to a pension are eligible for tax relief at your highest rate of tax.
Find out more about employment-related tax reliefs, including reliefs for workers at sea and workers who commute to work in a different country. You can also read about taxation of benefits from employment.
Housing tax reliefs
If you rent a room in your home to a private tenant you may claim rent a room relief. If you rent your home you may be able to claim Rent Tax Credit if you meet the criteria. If you pay a mortgage, you may claim tax relief on mortgage interest.
For an overview of tax reliefs relating to housing, and for information on taxation when transferring the ownership of a home, see housing tax credits and reliefs.
Tax relief is available on fees paid for approved third-level courses. You can find out more about tax relief for third-level fees here.
If you pay medical expenses that are not covered by the State or by private health insurance, you may claim tax relief on some of those expenses. Find out more about taxation and medical expenses and about tax relief on nursing home fees and for dependent relatives.
Tax relief is also available for premiums paid for health insurance and for long-term care insurance. The insurance company grants this tax relief at source.
Tax following a death
The treatment of tax reliefs following a death depends on the civil status of the deceased person and on the way in which he or she was taxed if married or in a civil partnership.
Additional tax credits are available to widowed persons and surviving civil partners. Find out more about tax reliefs following a death.
Separation, divorce or dissolution
If a married couple divorce or separate, or civil partners separate or a civil partnership is dissolved, this has important tax implications. Find out more about taxation following separation, divorce or dissolution, including information about how maintenance payments are taxed.
This table sets out the main tax credits available in 2016 and 2017.
The Revenue Commissioners also provide a list of tax credits and the value of the credits in current and previous years.
|Married person or civil partner||€3,300||€3,300|
|Employee Tax Credit (formerly known as the PAYE tax credit)||€1,650||€1,650|
|Earned Income tax credit||€550||€950|
|Widowed person or surviving civil partner qualifying for Single Person Child Carer Credit||€1,650||€1,650|
|Widowed person or surviving civil partner (without dependent children)||€2,190||€2,190|
|Widowed Person or Surviving Civil Partner in year of bereavement||€3,300||€3,300|
|Single Person Child Carer Credit||€1,650||€1,650|
|Incapacitated Child Credit||€3,300||€3,300|
|Blind Tax Credit
Married - one spouse or civil partner blind
Married - both spouses or civil partners blind
|Widowed person or surviving civil partner with dependent child tax
Bereaved in 2016
Bereaved in 2015
Bereaved in 2014
Bereaved in 2013
Bereaved in 2012
Bereaved in 2011
|Age tax credit
Single, widowed or a surviving civil partner
Married or in a civil partnership
|Dependent relative tax credit||€70||€70|
|Home carer tax credit||€1,000||€1,100|