Schedules Bands & Credits

Table of Contents

Taxable Income

Irish income tax rules calculate taxable income for each of the various categories of income. There are distinct rules for each category of income.

Trading income, employment income, dividend income, rental income and other minor categories of income have their own rules in relation to what is or is not included in the calculation, what is deductible and how allowances, losses and charges may (or may not) be allowed.

Income from the various sources as computed in accordance with the rules for the various sources is added together. So-called charges are deducted from total income.

Charges are certain types of payment such as certain interest and legally payable sums. They are deducted from total income, and not just one category of income is favourable.

The gross income less charges is taxable income. Certain allowances and reliefs are, still available at the top rate are then deducted. Income tax is then paid at 20% on standard rate band and at 40% on the balance.

A non-resident who is a resident in the EU is entitled to the full personal credits, if 75 percent of his income is subject to Irish tax.

Single Person Band

For a single person, a widowed person or a surviving civil partner the 20% tax band is €35,300 (2021). Where that person qualifies for a one parent family tax credit, the 20% tax band is €39,300 (2021).

Finance Act 2022 increased the standard rate band and a number of tax credits, with effect from 1 January 2023. The standard rate band for a single person was increased by €3,200 (€36,800 ; 2022) to €40,000 (2023), with commensurate increases in the bands applying to those in receipt of the single person child carer tax credit, married persons and persons in civil partnerships.

Finance Act 2023 increases the standard rate band and a number of tax credits, with effect from 1 January 2024. The standard rate band for a single person was increased by €2,000 to €42,000, with commensurate increases in the bands applying to married persons and persons in civil partnerships and those in receipt of the single person child carer tax credit.

The balance is taxed at 40%. Credits are applied to the tax thereby calculated as due.

Bands

Where each spouse has income, the minimum band is €44,300 which can be increased up to a maximum of €26,300 (2021) or by the amount of the income of the spouse with the lower-income .

For married couple or civil partners where only one spouse has income, the standard rate band is €44,300 (2021). Where both spouses have income, the standard rate band can be transferred to the other spouse.Finance Act 2023 increases the standard rate band and a number of tax credits, with effect from 1 January 2024.

The standard rate band for a single person was increased by €2,000 to €42,000 for 2024, with commensurate increases in the bands applying to married persons and persons in civil partnerships and those in receipt of the single person child carer tax credit.

Under the 2022 Act (for 2023), the standard (20%) rate band for couples in a marriage or civil partnership is €49,000 (€51,000 for 2024). If both are working it is increased by the lower amount of either:

€31,000 (2023) (€33,000 2024) or
the income of the lower earner.

The balance is taxed at 40%. Credits are applied to the tax thereby calculated as due.

Home Carers Credit

Dual income couples cannot claim both the increased Standard Rate Cut-Off Point and the Home Carer Tax Credit. Depending on circumstances, it may be more beneficial to claim the home carer’s tax credit. The home carer’s tax credit is available only, where the couple have children or other dependents who are being cared for. See below.

The Home Carer Tax Credit rate is €1,700 for 2023. If the carer has income less than €7,200, then the full tax credit is available. The amount does not include Carer’s Allowance, from the Department of Social Protection (DSP).

If the carer earns more than €7,200, he or she will receive a reduced tax credit. In this case, the total tax credits available will be reduced by one half of the difference between ther income and €7,200. If income is €10,600 or more during 2023, then the credit cannot be claimed.

The home carer tax credit was increased by €100 to €1,800 by Finance Act 2023.

The single person child carer credit was increased by €100 to €1,750 and the incapacitated child tax credit was increased by €200 to €3,500.

Dependent Person

The dependent person cared for must be either:

a child for whom the child benefit payment is received from the Department of Social Protection (DSP)
a person aged 65 years or over
a person who is permanently incapacitated due to mental or physical disability.

If the dependent person who is a relative of the carer or his or here spouse or civil partner, they need not live in your home. They must however live either:

next door in a neighbouring home
on the same property or
within 2 kilometres of the carer’s home.

There must be a direct communication link (for example, a telephone or alarm system) between the carer’s home and the home of the dependent person. A relative includes a person for whom you act as a legal guardian. If the person cared for is not a relative, (or a relative of spouse or civil partner), then they must live in the carer’s house.

Home Carer Tax Credit Issues

Finance Act 2022 clarifies the Home Carer Tax Credit. The amendment provides that the income threshold of €7,200, applied when determining if the ‘home carer’ qualifies for a full or partial tax credit, is proportionately increased. The proportionate increase is again equal to one fifty-second for individuals paid on a weekly basis, and one twenty- sixth for individuals paid on a fortnightly basis.

This also provides that where a home carer has emoluments from two sources (one of which is paid weekly and one of which is paid fortnightly) and a Week 53 scenario arises in respect of both of those sources, the increased income threshold will apply based on whichever of those income sources is most beneficial to the home carer.

The provisions related to the Home Carer Tax Credit establishes a statutory footing for a practice formerly operated by the Revenue Commissioners on an administrative basis and the 2022 Act did not involve any change in tax treatment applicable to home carers.

Basic Tax Credits

Once the tax is computed, the available tax credits are applied, towards the tax thereby calculated. Some tax credits are refundable, but most are in the nature of allowances and are not refunded if not used.

Personal tax credits are available against gross tax payable for the relevant year. An individual is entitled to personal tax credits and reliefs in accordance with his personal circumstances.

Every individual has a personal tax credit, depending on circumstances. A single person’s credit is €1,650. (€1,775; 2023) This is also the credit for a married person who was elected for separate or single assessment. Finance Act 2022 increased the value of the tax credit from €1,700 to €1,775.

The personal tax credit was increased by €100 to €1,875 for single persons by Finance Act 2023.

Married Person

A married person, who is subject to joint assessment is entitled to a tax credit of €3,300 (€3,400 (2022) (€3,550 (2023).In order to qualify, the married persons must live together and elect to be jointly assessed.

Finance Act 2022 increased the standard rate band and a number of tax credits, with effect from 1 January 2023. The basic personal tax credit available to married persons and civil partners jointly assessed to tax increased from €3,400 to €3,550.The personal tax credit was increased by by €200 to €3,750 in the case of married persons and civil partners jointly assessed to tax by Finance Act 2023.

In the year of marriage a proportion of the tax credits may be available for transfer to the other spouse or civil partner without earnings sufficient to use them

A married tax credit is given for a year where husband and wife are jointly assessed or if they are living apart, one is wholly maintaining the other and the former is not entitled to a deduction in his income tax for the sums paid for the maintenance of the latter.

A married tax credit is available for a divorced couple for so long as they remain unmarried and elect for joint assessment, provided that they are resident in the state.

Assessment Election

The election as to which spouse is to be assessed must be made by April 1^st in the relevant year. This spouse who is assessable, has responsibility for tax liability on the full income and is assessable. He or she is entitled to the combined credits and should file a joint tax return.

Where there is a repayment it is paid in proportion unless the inspector determines another method to be fairer.

Where the jointly assessed spouse has not paid the tax within 28 days of the due date. Revenue can recover the tax from the other spouse. The amount may be the lesser of the tax payable on the amount that would been assessed under separate assessment.

Separated / Divorced

Separated or divorced couples who have an maintenance agreement in place, are resident, have not remarried or entered into a civil partnership may elect for joint assessment.

Where one separated spouse is wholly or mainly maintaining the other spouse, he or she may continue to receive the married persons tax credit provided that they do not elect that payment be treated as a deduction from the income of the paying spouse. The other spouse may still be entitled to the personal tax credit of €1650

Widowed

A widowed person has a tax credit of €2,190 if there are no dependent children. There was a further single person childcare allowance with qualifying dependent children of €1650.Finance Act 2022 increased the value of the tax credit from €1,700 to €1,775.

A widowed person who has dependent children qualifies for tax credits at rates tapering down from €3600 to €1800 during the five years after bereavement. The widowed person must have a qualifying child and not have remarried or be living with another person “as man and wife”.

The tax credit is available in the year of death. This may be available in respect of post-death income where the surviving spouse had not previously claimed the married tax credit. The latter credit may be available in respect of pre-death income.

If the surviving spouse was claiming the married tax credit in the year of death, that spouse may claim the married person tax credit for the year. Otherwise the surviving spouse’s may claim a tax credit of €2,430 where there are no children and €1,830 where there are no dependent children.

Single Person with Child

A single person who has a qualifying child is entitled to one parent credit family of €3,300 (€3,400; 2023). A qualifying child is one under 18 or over 18 in full time education or one who is permanently incapacitated, in the custody of and maintained by the claimant for the whole or part of the year.

A tax credit is available for a widowed person or other person who maintains a qualified child who resides with him for the whole or part of the year. It is not available for a person who lives with another as husband and wife.

A qualifying child is a child under 18, over 18 and in full-time education or permanently incapacitated before the age of 18. The child must be a child of the claimant or in the custody of the claimant who is maintained by the claimant at his own expense, for the whole or part of the year. A child includes a stepchild and adopted child.

The single parents child tax credit is not available where a married person’s tax credit is claimed.

The former income exemptions which exempted income below certain amounts (doubled for married couples),with increases for qualifying children, was abolished in 2008.

PAYE Credit

A person who is income is subject to PAYE qualifies for the PAYE tax credit of €1650 (€1,775; 2023).The value of both the employee tax credit and earned income credit was increased from €1,775 to €1,875 for 2024

Where an individual is entitled to both the employee tax credit and the earned income tax credit in the same year of assessment, the aggregate of credits available to him or her under these two provisions will not exceed €1,875.

The PAYE credit is not transferable between spouses or civil partners.

In the case of spouses, each may be entitled, if each has emoluments. This is not available to a so-called proprietary director or emoluments paid by to the employer’s spouse or certain connected parties, including a partnership to a spouse or child.

The credit applies to employees, other than proprietary directors, who pay PAYE. It does not usually apply to employed spouses or children. child’s. A child of a director or proprietor is entitled to the credit, if he works full-time and his income exceeds a certain threshold.

If tax at the standard rate on income for the year is less than this amount, the credit is restricted to that lower amount.

The PAYE credit is available to

certain recipients of pensions and benefits paid by the Department of Social Protection.
foreign Social Security benefit
profits and gains from a foreign employment which is subject to a system equivalent to PAYE in the foreign country, where they are taxable in the foreign country and in the State and

would be regarded as emoluments if the employment was exercised in the state.

Proprietary Directors

This credit does not apply to a proprietary director (owning more than 15% of the company employer). The credit is not available where the income is from an employment where a spouse or civil partner is a proprietary director of the employer a partner or sole trade employer..

A proprietary director is one who controls, directly or indirectly, more than 15 percent of the ordinary share capital of the company concerned.

There is an exception for certain children of proprietary directors where the child earns at least €4,572 and devotes substantially the whole of his time, to the duties of the office or employment. PAYE must be deducted and paid.

In the case of employees who are children of the employer (sole trader or partnership) or a company of which a parent is a proprietary director (15% shareholding) the child is entitled to the PAYE credit only if they are not themselves a proprietary director, they are paid at least €4572, PAYE is operated, and they devote themselves substantially full-time to the duties of the employment concerned

A proprietary director who has other earned employment income subject to PAYE may be entitled to the PAYE tax credit in respect thereof.

Earned income credit

The earned income credit has been gradually increased to the lower of 20% of the earned income and €1650. This is available to propriety directors sole traders and partners.If a person qualifies for both the earned income credit and the PAYE credit the maximum credit allowed overall is €1650.

The value of both the employee tax credit and earned income tax credit increased from €1,700 to €1,775 for 2023. The value of both the employee tax credit and earned income credit was increased from €1,775 to €1,875 for 2024.

Dependent Relative

The dependent relative tax credit is €80. The person claiming the credit must prove he maintains a spouses or relative who is incapacitated by old age, or widowed parent, whether incapacitated or not or a son or daughter whose services is necessary by reason of old age. There is an income limit for the person cared for

Age-Based Exemption

A person who is over 65 years (or whose spouse is over 65 years)and married is entitled to an additional age tax credit of €490. A person who is over 65 years and the single person or taxed as a single person is entitled to an age tax credit of €245.

Married couples, where either spouse is over 65 years old, with income under €36,000 per annum, are exempt from income tax. Single and widowed persons over 65 years old, with income of less than €18,000 per annum, are exempt.

Either person may be over 65. The exemption is increased by €575 for the first two dependent children and €830 per child thereafter. A dependent child may be in full-time education or training incapacitated physically or mentally (this occurring before 21 years of age)

By Finance Act 2011, the exemption for a single or widowed person over 65 was reduced from €20,000 to €18,000. For a married couple the sum was reduced from €40,000 to €36,000.

Marginal relief is available. It restricts the maximum tax payable under the general rules, to 40 percent of the excess over the above amounts. Where there is DIRT the income exemption is increased by its amount for the purpose of marginal relief.

Persons over 65 whose income is less than the exemption amount, may reclaim DIRT.