Dáil Éireann Debate, Tuesday - 21 May 2024
235. Deputy Bernard J. Durkan asked the Minister for Finance the extent of the different types of tax reliefs available to both PAYE employees and self-employed persons; and if he will make a statement on the matter. [22985/24]
Amharc ar fhreagraIncome tax on both PAYE employees and self-employment income is calculated by reference to the same rate bands, which will vary depending on the personal circumstances of the individual. A range of tax credits may also apply, again depending on the personal circumstances of the individual.
Income up to a certain limit is taxed at the ‘standard rate’ of income tax, which is currently 20%. This is known as the standard rate band. Any income above this band, is taxed at the higher rate of income tax, which is currently 40%. The standard rate band for a single person for the 2024 year of assessment is €42,000. Depending on the personal circumstances of the individual this may be further increased. The amount of income tax due is then reduced by applicable tax credits.
Revenue has a comprehensive list of the different rate bands and personal tax credits available on its website at: www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/tax-relief-charts/index.aspx
An overview of some of the main tax credits are set out below.
Personal Tax Credit
A Personal Tax Credit of €1,875 applies to each individual for the 2024 year of assessment. For a jointly assessed couple or civil partners the amount is €3,750.
Employee Tax Credit (PAYE employees)
The Employee Tax Credit is available to individuals in receipt of income taxable under the Pay as You Earn (PAYE) system. This includes wages, benefit-in-kind, occupational pensions and Department of Social Protection (DSP) income. Certain foreign wages and pensions may also qualify for this credit.
The Employee Tax Credit is equal to the lesser of 20% of the individual’s yearly income or the specified amount. The specified amount for the 2024 year of assessment is €1,875. This credit can only be claimed once, regardless of how many employments are held. Civil partners or a married couple are both entitled to claim this credit.
The Employee Tax Credit is not available to a range of individuals such as proprietary directors and spouses/civil partners on directorship income; a spouse, civil partner or child of the person paying the income or a partner in a partnership.
Earned Income Tax Credit (self-employed individuals)
The Earned Income Tax Credit is available to an individual whose income in a tax year includes, or is made up of, qualifying earned income.
Qualifying earned income means earned income which does not qualify for relief under the Employee Tax Credit. This includes, for example, self-employment income from a trade or profession and employment income earned by a proprietary director and his or her spouse or civil partner.
The Earned Income Tax Credit is equal to the lesser of 20% of the individual’s qualifying earned income or the specified amount. The specified amount for the 2024 year of assessment is €1,875.
In some cases, where an individual has earned income from various sources, he or she may be entitled to both the Employee Tax Credit and the Earned Income Tax Credit in a tax year. In such cases the combined value of both tax credits cannot exceed €1,875.
Rent Tax Credit
The Rent Tax Credit was introduced by Finance Act 2022 and will be available in respect of qualifying payments made during the 2022 to 2025 years of assessment inclusive. For 2022 and 2023 the maximum value of this credit is €1,000 in the case of a jointly assessed couple or civil partners and €500 in all other cases. For 2024 and 2025 the maximum value of this credit is €1,500 in the case of a jointly assessed couple or civil partners and €750 in all other cases.
The Rent Tax Credit will, subject to a number of conditions, be broadly available in the following three circumstances:
1. where the claimant makes a qualifying payment in respect of a residential property which he or she uses as his or her principal private residence,
2. where the claimant makes a qualifying payment in respect of a residential property which he or she uses to facilitate his or her attendance at or participation in his or her employment, office holding, trade, profession or an approved course, and
3. where the claimant makes a qualifying payment in respect of a residential property which his or her child uses to facilitate his or her child’s attendance at or participation in an approved course.
