What is Personal Tax Credit in Ireland? Everything You Need to Know

In Ireland, personal tax credits are essential to understand if you want to reduce the amount you pay in tax legally. 

Every taxpayer resident in Ireland is entitled to the personal tax credit, but the type and amount depend on factors like marital status, dependents, and employment type. 

What is a Personal Tax Credit?

A personal tax credit is an amount that reduces your taxable income, directly lowering the amount of tax you need to pay. Unlike deductions, which reduce the income on which tax is calculated, a tax credit reduces the actual tax payable.

Difference Between Tax Credit, Tax Relief, and Exemption

• Tax Credit: Reduces the tax you owe directly.
• Tax Relief: Reduces taxable income (indirect effect).
• Exemption: Certain incomes are not taxed at all.

Most personal tax credits are applied automatically through the PAYE system for full-time employees, but you must update your marital or civil partnership status with Revenue to ensure the correct credits are applied.

Types of Personal Tax Credits in Ireland

1. PAYE Credit

• Eligibility: All employees paying tax through PAYE are entitled to employee tax credits.
• Amount: €1,875 (2024).
• Application: Automatically applied at source for full-time PAYE employees, reducing overall tax liability.

2. Single Person Credit

• Eligibility: Single, separated, divorced, or former civil partner.
• Example Calculation: If a single person has a gross income of €35,000 per tax year, the personal tax credit of €2,000 reduces their tax liability directly.

3. Married Couple / Civil Partner Credit

• Eligibility: Married or in a civil partnership.
• Joint Assessment vs. Separate Assessment:
  • Joint Assessment: Couples’ combined income taxed together; the credit applies to the nominated spouse or civil partner.
  • Separate Assessment: Each spouse claims their own credit individually.
• Voluntary Maintenance: If separated or divorced, you may still claim this credit if you pay maintenance to your spouse or civil partner.
• Updated Amounts: €4,000 (2025).

4. Age Credit

• Eligibility: Taxpayers aged 65 and over.
• Interaction: Can be combined with other credits, such as PAYE or Single Person Credit.

5. Home Carer Credit

• Eligibility:
  • You care for a dependent child or another qualifying person.
  • Your spouse or civil partner earns below a certain threshold.
• Example: A married couple with one working partner and one full-time home carer can claim €1,700 in addition to the personal tax credit, reducing the tax payable.

6. Dependent Relative Credit

• Eligibility: For caring for a relative who depends on you financially.
• Documentation Needed: Proof of relationship and dependency, such as financial records or residence documents.

7. Widowed Person / Surviving Civil Partner / Single Parent Credit

• Eligibility: Widowed or surviving civil partner with or without dependent children, and single parents.
• Amounts by Year After Spouse’s Death:
  • Year of death: €4,000
  • 1st year after death: €3,600
  • 2nd year: €3,150
  • 3rd year: €2,700
  • 4th year: €2,250
  • 5th year: €1,800
• Single Parent Tax Credit: Additional €1,750 (2024) for parents with dependent children. Only one parent can claim if the child resides part-time with both.
• Example: A widowed person with two dependent children can claim the widowed parent tax credit plus the single person child carer credit, significantly reducing tax.

8. Other Credits

• Employee Tax Credit: €1,875 for PAYE earners, applied automatically.
• Blind Person Credit, Incapacitated Child Credit: Often overlooked but available to eligible taxpayers.
• Importance: Claiming these additional credits ensures you are not overpaying tax and can maximise refunds.

Who is Eligible for Personal Tax Credits?

• Employees (full-time or part-time), self-employed, students, pensioners, and new residents in Ireland.
• Must be resident in Ireland for tax purposes.
• Eligibility is influenced by:
  • Marital or civil partnership status
  • Dependent children
  • Income type (PAYE, self-employment, or mixed)

How to Calculate Personal Tax Credit?

1. Identify all applicable credits: Single Person, PAYE, Home Carer, etc.
2. Sum up the amounts: Combine the credits you are entitled to claim.
3. Subtract from total tax payable: This reduces the amount you actually pay.

Scenario	Applicable Credits	Total Tax Credit (€)
Single employee	Single Person + PAYE	3,875
Married, 1 dependent child, 1 full-time home carer	Married + Home Carer + PAYE	7,575
Widowed parent, 2 children	Widowed Parent + Single Person Child Carer	4,550

How to Claim Personal Tax Credits?

• PAYE Employees: Automatically applied; check Revenue MyAccount to ensure status is updated.
• Self-Employed: Include in annual self-assessment tax return.
• Documentation: Proof of marital status, dependent children, and qualifying home carer responsibilities.
• Status Updates: Notify Revenue for marriage, divorce, civil partnership, or a change in dependents.

Common Mistakes to Avoid

• Not updating marital or civil partnership status with Revenue.
• Overlooking dependent-related credits like the person child carer credit.
• Claiming credits incorrectly or missing lesser-known credits.
• Not combining credits efficiently.

Tips for Maximising Tax Credits

• Annual review: Check credits each tax year.
• Combine credits efficiently: E.g., widowed parent + single person child carer.
• Keep accurate records: Essential for home carer, dependent relative, or single parent credits.
• Stay updated: Budget changes may adjust amounts or eligibility.

Get Professional Help

J Maguire is your trusted accounting and tax consulting firm based in Dublin, and we can help you understand which credits you are entitled to claim and guide you through the process, ensuring you reduce the amount you pay in taxes correctly while staying compliant. 

Make informed decisions with professional support. Contact us today!

Key Takeaways

• Personal tax credits directly reduce the tax payable, unlike deductions.
• Eligibility depends on marital status, dependents, age, and employment type.
• Widowed, single parents, and home carers have specific credits often missed by taxpayers.
• Regularly updating Revenue about your status and dependents ensures full entitlement.
• Combining multiple credits efficiently can maximise refunds and reduce tax liability.

FAQs

1. Can separated parents claim the same child credit?

Only one parent is entitled to claim the single person child carer credit if the child resides with both parents part-time.

2. How does joint assessment affect married couples?

Under joint assessment, the nominated spouse or civil partner claims the full credit for combined income.

3. Are personal tax credits refundable if unused?

Unused credits reduce tax payable; any excess may be refunded through Revenue after assessment.

4. Can self-employed individuals claim PAYE-related credits?

Self-employed cannot claim PAYE credits but are entitled to personal tax credits, home carer, and dependent relative credits.

5. How often should I update my marital status for credits?

Any change in marital status, civil partnership, or dependents should be updated before the end of the tax year to ensure correct credits.