Income Tax & PRSI
Income tax
A full tax credit system was introduced with effect from 6 April 2001. This system replaced the old tax-free allowance system and equalises the value of tax allowances to all taxpayers. Accordingly, every €1,000 of a personal tax allowance is now equivalent to a tax credit of €200 (i.e. €1,000 @ 20%) for each taxpayer.
Irish income tax rates
| Personal Circumstances |
Tax Year 2007 |
Tax Year 2008 |
| € |
€ |
Single/Widowed
without dependent children
Single/Widowed
qualifying for One-Parent Family Tax Credit
Married couple
(one spouse with income)
Married couple
(both spouses with income)
|
34,000@ 20%
Balance @ 41%
38,000@ 20%
Balance @ 41%
43,000@ 20%
Balance @ 41%
43,000@ 20%
(with an increase
of 25,000 max.)
Balance @ 41% |
35,400 @ 20%
Balance @ 41%
39,400 @ 20%
Balance @ 41%
44,400 @ 20%
Balance @ 41%
44,400 @ 20%
(with an increase
of 26,400 max.)
Balance @ 41% |
| Note: The increase in the standard rate tax band is restricted to the lower of €25,000 in 2007/€26,400 in 2008 or the amount of the income of the spouse with the lower income. The increase is not transferable between spouses. |
Taxpayers with low levels of taxable income may be exempt from tax altogether or may be able to avail of marginal relief. The thresholds are as follows.
Income tax exemption limits
| Personal Circumstances |
Tax Year 2007 |
Tax Year 2008 |
| € |
€ |
Single/Widowed
under 65
65 years of age or over
Married
under 65
65 years of age or over
Additional for Dependent Children
1st and 2nd child (each)
Each subsequent child
Marginal Relief Tax Rate
|
5,210
19,000
10,420
38,000
575
830
40% |
5,210
20,000
10,420
40,000
575
830
40%* |
* For 2008 the Marginal Relief Tax Rate only applies to persons 65 years of age or over.
Main personal tax credits
| Personal Tax Credits |
Tax Year 2007 |
Tax Year 2008 |
| € |
€ |
Single Person’s Tax Credit
Married Person’s Tax Credit
Widowed Person’s Tax Credit
- qualifying for One-Parent Family Tax Credit
- without dependent children
- in year of bereavement |
1,760
3,520
1,760
2,310
3,520
|
1,830
3,660
1,830
2,430
3,660
|
One-Parent Family Tax Credit
(with qualifying dependent children)
Widowed, Deserted, Separated or Unmarried |
1,760 |
1,830 |
|
Widowed Parent Tax Credit
Bereaved in 2008
Bereaved in 2007
Bereaved in 2006
Bereaved in 2005
Bereaved in 2004
Bereaved in 2003
Bereaved in 2002
Bereaved in 2001 |
-
-
3,750
3,250
2,750
2,250
1,750
|
-
4,000
3,500
3,000
2,500
2,000
nil |
| Home Carer’s Tax Credit (max.) |
770 |
900 |
| PAYE Tax Credit |
1,760 |
1,830 |
Age Tax Credit
(a) Single/Widowed
(b) Married |
275
550 |
325
650 |
| Incapacitated Child Tax Credit (see Note 1) |
3,000 |
3,660 |
| Dependent Relative Tax Credit (see Note 1) |
80 |
80 |
Blind Person’s Tax Credit
(single person)
(one spouse blind)
(both spouses blind)
Additional Allowance for Guide Dog |
1,760
1,760
3,520
*825 |
1,830
1,830
3,660
*825 |
Incapacitated Person -
Allowance for Employing a Carer |
*50,000 max |
*50,000 max |
| * Relief in respect of a Guide Dog and for Employing a Carer is allowable at the individual’s highest rate of tax, i.e. 20%/41% in 2007 or 2008. |
| |
Tax Year 2007 |
Tax Year 2008 |
| Note 1: The child’s/relative’s income limits are: |
€ |
€ |
| One-Parent Family Tax Credit |
nil |
nil |
| Incapacitated Child Tax Credit |
nil |
nil |
| Dependent Relative Tax Credit |
*12,745 |
*13,473 |
*In the case of Dependent Relative Tax Credit, if the relative’s income exceeds the relevant limit no tax credit is due.
Tax relief for loan interest
Tax relief at source (TRS) on secured loans
Tax relief for home mortgage interest (secured loans) is not given through the tax system but is instead granted at source (TRS). Mortgage repayments are reduced by the amount of the tax credit due. For example, if the interest element of your mortgage repayment per month is €500, your mortgage lender will reduce your monthly mortgage payment by €100 per month. This reduction is the same as giving tax relief at the standard rate of tax (20%).
Any future adjustments in your tax relief will be made automatically by your mortgage lender. It is not necessary to claim relief on your annual tax return or to contact your local Revenue office.
If, however, you are making mortgage repayments and
not receiving Tax Relief at Source, you should contact TRS Section, Collector-General’s Division, at LoCall 1890 46 36 26, who will arrange for the relief to come into effect.
Unsecured home loans
Relief for interest payments made on unsecured home loans used for qualifying purposes, i.e. repair or improvement of your sole or main residence, can be claimed by review at the end of the tax year.
If, however, you are paying interest on a qualifying private residence mortgage in excess of the ceiling for relief, listed below, and you are receiving tax relief at source on this interest, there will be no additional relief due in respect of a qualifying unsecured home loan.
Amount of relief available
Relief is due at the standard rate of tax (20%) in the tax years 2007 and 2008 subject to the following upper limits.
| Tax Year |
2007 |
2008 |
| |
Single |
Married/Widowed |
Single |
Married/Widowed |
| First Mortgage* |
€ |
€ |
€ |
€ |
Ceiling
Tax Credit |
8,000
1,600 |
16,000
3,200 |
10,000
2,000 |
20,000
4,000 |
| Others |
|
|
|
|
Ceiling
Tax Credit |
3,000
600 |
6,000
1,200
|
3,000
600 |
6,000
1,200 |
First-time buyers
* The period for which the relief is available is seven years.
Historical Irish Income Tax Rates (1988 to 2000) |
|
Tax Year |
Single/
Widowed |
Married
Couple |
Rate |
|
1988/89 |
5,700
2,900
Balance |
11,400
5,800
Balance |
35%
48%
58% |
|
1989/90 |
6,100
3,100
Balance |
12,200
6,200
Balance |
32%
48%
56% |
|
1990/91 |
6,500
3,100
Balance |
13,000
6,200
Balance |
30%
48%
53% |
|
1991/92 |
6,700
3,100
Balance |
13,400
6,200
Balance |
29%
48%
52% |
|
1992/93 |
7,475
Balance |
14,950
Balance |
27%
48% |
|
1993/94 |
7,675
Balance |
15,350
Balance |
27%
48% |
|
1994/95 |
8,200
Balance |
16,400
Balance |
27%
48% |
|
1995/96 |
8,900
Balance |
17,800
Balance |
27%
48% |
|
1996/97 |
9,400
Balance |
18,800
Balance |
27%
48% |
|
1997/98 |
9,900
Balance |
19,800
Balance |
26%
48% |
|
1998/99 |
10,000
Balance |
20,000
Balance |
24%
46% |
|
1999/00 |
14,000
Balance |
28,000
Balance |
24%
46% |
PRSI
Rates for 2004 to 2008
Employees
|
Class A (normal rate at which contributions are made) |
|
Year |
Employee Income (€) |
Employer's rate |
Employee's rate |
|
2008 |
Up to 50,700
Over 50,700
Over 100,100 |
10.75%
10.75%
10.75% |
6% (includes 2% Health Contribution)
2% (Health Contribution)
2.5% (Health Contribution) |
|
2007 |
Up to 48,800
Over 48,00
Over 100,100 |
10.75%
10.75%
10.75% |
6% (includes 2% Health Contribution)
2% (Health Contribution)
2.5%(Health Contribution) |
|
2006 |
Up to 46,600
Over 46,600 |
10.75%
10.75% |
6% (includes 2% Health Contribution)
2% (Health Contribution) |
|
2005 |
Up to 44,180
Over 44,180 |
10.75%
10.75% |
6% (includes 2% Health Contribution)
2% (Health Contribution) |
|
2004 |
Up to 42,160
Over 42,160 |
10.75%
10.75% |
6% (includes 2% Health Contribution)
2% (Health Contribution) |
Non-cash benefits
From January 2004, PRSI applies to non-cash benefits in the same way as income tax applies. Before January 2004, any non-cash benefits that were provided were not liable to PRSI. However, following the changes, employers will have to pay employer’s PRSI (currently 10.75%) on non-cash benefits, regardless of the amount of employee earnings. Furthermore, where the employee’s earnings are below the PRSI threshold, now set at € employee PRSI charges will also apply. The 2% Health Contribution will also now apply to the non-cash benefits.
Main exemptions and reliefs
Employees earning €352 p.w. or less will be exempt from PRSI, and those earning €500 p.w. or less will be exempt from the Health Contribution of 2%. For employees earning in excess of €352 p.w. the first €127 p.w. will continue to be free of PRSI.
Self-employed
|
Class S (Self-Employed) |
|
Year |
Income (€) |
PRSI rate |
|
|
2008 |
Up to 26,000
Over 26,000
Over 100,100 |
3% (no Health Contribution)
5% (includes 2% Health Contribution)
5.5% (includes 2.5 Health Contribution) |
|
|
2007 |
Up to 24,960
Over 24,960
Over 100,100 |
3% (no Health Contribution)
5% (includes 2% Health Contribution)
5.5% (includes 2.5% Health Contribution) |
|
|
2006 |
Up to 22,800
Over 22,800 |
3% (no Health Contribution)
5% (includes 2% Health Contribution) |
|
|
2005 |
Up to 20,800
Over 20,800 |
3% (no Health Contribution)
5% (includes 2% Health Contribution) |
|
|
2004 |
Up to 18,512
Over 18,512 |
3% (no Health Contribution)
5% (includes 2% Health Contribution) |
|
Minimum annual PRSI contribution remains at €253.