Ireland | Sep 10, 2023

How to Reduce Your Irish Income Tax — Credits and Reliefs Explained

Ireland might be one of the most expensive countries to live in, but savvy taxpayers can claim plenty of tax reliefs and tax credits to maximize their take-home pay.

Close-up of euro banknotes next to an Irish Tax Code Declaration form

Irish taxpayers know that the beauty of their cities, towns, and landscapes is reflected in their taxes and cost of living. But, while the Emerald Isle is one of the most expensive countries to live in, there are plenty of tax reliefs and tax credits in Ireland that its inhabitants can claim. Let's take a closer look at them.

1. What's a Tax Credit?

Just as a coupon reduces the amount of a sticker price you have to pay, tax credits reduce how much of your income tax you have to pay. Some tax credits are automatically given to you, while others must be claimed by eligible taxpayers.

Applying for tax credits in Ireland is a great way to reduce your total taxes due. If you're using the PAYE system, your tax credits will be spread throughout the year, but be aware that unused credits won't rollover into next year.

Want to learn how Irish taxes affect your take-home pay? Check out our Tax Calculator for Ireland to estimate your tax burden and read about the different taxes and contributions that get deducted from your salary every month.

2. What Tax Credits Can Be Claimed in Ireland?

Revenue automatically applies a basic personal tax credit to all residents, which varies in value depending on personal circumstances. However, additional tax credits can be claimed for other circumstances, such as being a home carer, widowed parent, sea-going Navy personnel, or blind.

Here are a few common tax credits in Ireland along with their values:

Tax Credit Value
Single Person €1,775
Married or in a Civil Partnership €3,550
Employee Tax Credit (PAYE tax credit) €1,775
Earned Income Tax Credit €1,775
Single Person Child Carer Tax Credit €1,650
Dependent Relative Tax Credit €245
Home Carer Tax Credit €1,700

3. What's a Tax Relief and How Is It Different From a Tax Credit?

Tax reliefs lower the amount of income on which you're taxed, while tax credits lower the amount of those taxes you have to pay. If tax credits are like coupons, then tax reliefs are a new lower sticker price that the coupon is applied to.

When a relief is applied, Revenue will deduct its value from your income before they calculate your income taxes — that's why reliefs are sometimes called "deductions". If you've already paid your tax and apply a relief later, you'll be refunded the proper amount.

4. What Expenses Can I Claim Tax Relief for in Ireland?

There are plenty of tax reliefs in Ireland, each addressing a unique personal circumstance, such as medical expenses, tuition fees, and work-from-home costs. The value of these reliefs will either be a fixed amount or a variable amount based on the highest rate of tax you pay.

Revenue's website includes a complete list of Irish tax reliefs. Here are some of the most common:

Medical Expense Relief

You can claim tax relief on any medical expense you paid yourself, such as health insurance or long-term care insurance premiums. This medical expense relief is granted at-source by your insurance company.

Pension Tax Relief

Anyone making contributions to an approved pension scheme is eligible for income tax relief. This relief is deducted from your salary by your employer, but you can also claim it on Revenue's myAccount if necessary. Note that the pension tax relief in Ireland doesn't include employee pension contributions to PRSI or the USC.

Working From Home Relief

If you work from home and your employer doesn't cover remote work expenses, you can claim tax relief at the end of the year. The amount of relief you can claim is based on how many days you worked from home, the cost of your expenses, and how many costs Revenue accepts as valid work-from-home expenses.

Housing Tax Relief

Some housing expenses are eligible for tax relief. For instance, if you're a landlord, you can deduct 100% of the interest on any mortgages used to buy or improve your rental properties. If you rent out a room or flat in your home, you're also eligible for relief covering the income tax on your tenants' rent payments.

To learn more about the expenses you can expect in Ireland, read our Cost of Living in Dublin article. There, we explore renting and house-buying costs, what kind of salary you can expect, and plenty of general living expenses.

5. Final Thoughts

Ireland might rank among the most expensive countries to live in, but there are plenty of tax credits and reliefs that savvy taxpayers can take advantage of to increase their take-home pay.

By finding the right tax relief, you can lower your taxable income, and by finding the right tax credits, you can lower the amount of tax you pay on that income. That means you can keep a bit more of your earnings and enjoy what Ireland has to offer.