Income Tax, PRSI and Levies
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 2009 |
Tax Year 2010 |
|
€ |
€ |
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)
|
36, 400@ 20%
Balance @ 41%
40,400@ 20%
Balance @ 41%
45, 400@ 20%
Balance @ 41%
45,400@ 20%
(with an increase
of 27,400 max.)
Balance @ 41% |
36,400 @ 20%
Balance @ 41%
40,400@ 20%
Balance @ 41%
45,400 @ 20%
Balance @ 41%
45,400 @ 20%
(with an increase
of 27,400 max.)
Balance @ 41% |
| Note: The increase in the standard rate tax band is restricted to the lower of €27,400 in 2009/2010 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 2009 |
Tax Year 2010 |
|
€ |
€ |
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
20,000
10,420
40,000
575
830
40% |
5,210
20,000
10,420
40,000
575
830
40% |
Main Personal Tax Credits
| Personal Tax Credits |
Tax Year 2009 |
Tax Year 2010 |
|
€ |
€ |
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 |
1,830
3,660
1,830
2,430
3,660
|
1,830
3,660
1,830
2,430
3,660
|
One-Parent Family Tax Credit
(with qualifying dependent children)
Widowed, Deserted, Separated or Unmarried |
1,830 |
1,830 |
|
Widowed Parent Tax Credit
Bereaved in 2009
Bereaved in 2008
Bereaved in 2007
Bereaved in 2006
Bereaved in 2005
Bereaved in 2004
|
-
4,000
3,500
3,000
2,500
2,000
|
4,000
3,500
3,000
2,500
2,000
-
|
| Home Carer’s Tax Credit (max.) |
900 |
900 |
| PAYE Tax Credit |
1,830 |
1,830 |
Age Tax Credit
(a) Single/Widowed
(b) Married |
325
650
|
325
650
|
| Incapacitated Child Tax Credit |
3,660 |
3,660 |
| Dependent Relative Tax Credit |
80 |
80 |
Blind Person’s Tax Credit
(single person)
(one spouse blind)
(both spouses blind)
Additional Allowance for Guide Dog |
1,830
1,830
3,660
825
|
1,830
1,830
3,660
825
|
Incapacitated Person -
Allowance for Employing a Carer |
50,000 max |
50,000 max |
| |
Tax Year 2009 |
Tax Year 2010 |
| 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 |
*13,837 |
*13,837 |
*In the case of Dependent Relative Tax Credit, if the relative’s income exceeds the relevant limit no tax credit is due.
Health Expenses ReliefTax relief for health expenses (save for nursing homes) will be granted at the standard rate (20%) for expenses incurred from 1 January 2009. Previously, relief was available at a taxpayer’s highest rate of tax. This meant that if you paid tax at 41% and you incurred expenses of €100, relief of €41 was available, now relief of €20 is only available.
Levies
1. Income Levy
The income levy is payable on gross income from all sources before any tax reliefs, capital allowances, losses or pension contributions. The 2009 composite rates and thresholds of the income levy are as follows:
1.67% Income up to €75,036 per annum
3% Income between €75,037 and €100,100 per annum
3.33% Income between €100,101 and €174,980 per annum
4.67% Income between €174,981 and €250,120 per annum
5% Income in excess of €250,120 per annum
Rates and thresholds: 2010
Income up to €75,036 per annum 2%
Income from between €75,037 to €174,980 per annum 4%
Income above in excess of €174,980 per annum 6%
The levy does not apply:
- Where an individual's income for a year does not exceed €15,028 per annum.
- For individuals aged 65 or over where their annual income does not exceed €20,000 per annum
- For full medical card holders
- To social welfare payments
2. Car Park Levy
A new levy of €200 per annum will be charged on employees whose employer provides them with car parking facilities in urban areas. More information on the levy is available here.
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 (This is known as Tax Relief 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 and you are entitled to mortgage interest relief of 25%, your mortgage lender will reduce your monthly mortgage payment by €125 per month.
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
The current rate of mortgage interest relief is 25% for first-time buyers in year 1 and year 2 and to 22.5% in years 3, 4 and 5. The rate of mortgage interest relief for non-first-time buyers is 15%. With effect from 1 May 2009 the number of tax years in respect of which mortgage interest relief may be claimed is 7 years for first time and non-first time buyers.
The rate of mortgage interest relief for 2008 was 20%.
Mortgage interest relief available for the tax years 2009 and 2010
| Personal Circumstances |
First Time Buyers |
All Others |
| Single |
€10,000 |
€3,000 |
| Married/Widowed |
€20,000 |
€6,000 |
PRSI
Rates for 2004 to 2008
Employees
|
|
Year |
Employee Income (€) |
Employer's rate |
Employee's rate |
|
2009 |
Up to 52,000
Over 52,000
Over 100,100 |
10.75%
10.75%
10.75% |
6% (includes 2% Health Contribution)
2% (Health Contribution)
2.5% (Health Contribution) |
|
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) |
|
|
|
2008
3% PRSI and 2% Health Contribution on all income up to €100,100 (5%)
3% PRSI and 2.5% Health Contribution on all income over €100,100 (5.5%)
2009
3% PRSI and 3.333% Health Contribution on all income up to €75,036 (6.333%)
3% PRSI and 4% Health Contribution on all income from €75,036 to €100,100 (7%)
3% PRSI and 4.167% Health Contribution on all income over €100,100 (7.167%)
Self-employed persons are exempt from Health Contribution where the annual income is €26,000 or less in 2008 or 2009. The minimum annual PRSI contribution is €253.
2010
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 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, employee PRSI charges will also apply. The 2% Health Contribution will also now apply to the non-cash benefits.
Main exemptions and reliefs
Employees are exempt from PRSI on the first €127 per week. Employees earning €352 or less per week in 2008 or 2009 are exempt from PRSI and Health Contribution. However, where earnings exceed €352 per week, the employee’s PRSI Free Allowance remains at €127 per week. Employees earning €500 or less per week in 2008 or 2009 are exempt from Health Contribution.
Self-employed
|
|
Year |
Income (€) |
PRSI rate |
|
|
2009 |
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) |
|
|
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) |
|
|
|
|
|
|
|
Minimum annual PRSI contribution remains at €253.