Introduction to income tax credits and reliefs

Introduction

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. The following information sets out the different tax reliefs that are available and provides links to further information. The Revenue Commissioners provide a list of the available tax credits and the value of the credits in current and previous years.

Budget 2012: there are no changes in personal tax credits or reliefs in 2012.

Tax credits

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.

This table sets out the main tax credits available in 2010, 2011 and 2012:

Tax reliefs

In some cases you can get a tax refund for specific expenses, for example, medical expenses or mortgage interest. In these cases your refund is based on the amount that you actually pay out. In some cases, such as mortgage interest, there is a limit on the maximum amount that you can claim. The value of a tax relief 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 41% and you can claim it at this rate, then it will reduce your tax by €41 (€100 x 41%). 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.

Personal tax credits

Depending on your circumstances, you will be entitled to the single, married/civil partner or widowed/surviving civil partner tax credit.

There are additional tax credits for widowed parents or surviving civil partners with dependent children.

Employment

If you are in employment and your income tax is deducted by your employer, you can claim the PAYE Credit. If you are a member of a trade union, you may claim a tax credit for membership subscription fees paid (abolished from 2011 tax year).

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 work expenses and benefits from employment.

Housing

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. If you rent a room in your home to a private tenant you may claim rent a room relief.

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.

Married people and civil partners

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. Find out more about the different options for the taxation of married people and civil partners.

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.

One-parent families

If you have a dependent child, and you are single, widowed or a surviving civil partner, separated, divorced, deserted or your civil partnership has been dissolved, you can claim the One-Parent Family Tax 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.

Find out more about tax reliefs for one-parent families.

Older people

A number of tax credits and reliefs are increased in value for people aged 65 and over. The rent tax credit is increased for people aged 55 and over.

There is also a number of tax reliefs available for the care of a person who is unable to maintain him/herself.

Find out more about tax reliefs for older people.

Education

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.

Medical expenses

You may claim tax relief on medical expenses that you incur for yourself or another person. Find out more about taxation and medical expenses.

Income tax reliefs 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/she was taxed if married or in a civil partnership.

There are additional tax credits available to widowed persons and surviving civil partners.

Find out more about tax reliefs following a death.