Personal reliefs and tax credits
The personal reliefs and tax credits you can use to reduce your income tax liability are:
As a deduction when computing taxable income
No limit: Gifts to the Minister for Finance (s 483).
€150,000: Enterprise investment scheme (s 490).
€50,000: Film investment (s 481).
€50,000: Carer for incapacitated person (s 467).
€31,750: Expenditure on heritage buildings/gardens (s 482).
€6,350: Seafarer allowance (s 472B).
€3,810 with €1,270 increase for each child: Previously long-term unemployed person (s 472A). In the second tax year of employment, it is €2,540 with €850 increase for each child, and in the third tax year, €1,270 with €425 increase for each child.
As a tax credit against tax liability
No limit: Medical expenses (s 469).
€3,600: Widowed parent in the first year after bereavement; €3,150 (second year); €2,700 (third year); €2,250 (fourth year); €1,800 (fifth year).
€3,300: Incapacitated child (per child) (s 465).
€3,300: Married couple, basic personal tax credit (s 461).
€1,725: Health insurance premiums (s 470B), where the insured is aged 80+ on contract date or renewal date; €1,275 (aged 70 – 80); €625 (aged 60 – 70).
€1,650: Individual, basic personal tax credit (s 461).
€1,650: One parent family (s 462).
€1,650: Blind person (s 468).
€1,650: Employee (s 472).
€1,650: Widowed person (bereavement year) (s 461).
€1,280: Rent paid by married couple/widowed person aged 55 or over.
€1,000: College fees (s 473A) (max),
€810: Home carer (s 466A),
€640: Rent paid by individual aged 55 or over.
€640: Rent paid by married couple/widowed person aged under 55.
€540: Widowed person (other years) (s 461A).
€490: Married couple one of whom is aged 65 or more (s 464).
€320: Rent paid by individual aged under 55.
€254: Training course fees (s 476) (max).
€245: Individual aged 65 or more (s 464).
€70: Dependent relative (per relative) (s 466).
Other reliefs
The other main reliefs from income tax are:
(a) Home loan interest (s 244) Loans taken out on or after 1 January 2013 will not qualify for relief. Loans taken out between 1 January 2004 and 31 December 2011 continue to obtain relief, but relief is abolished from 1 January 2018. During 2012 to 2017 inclusive, the interest ceiling for married couples and widowed individuals is €6,000, and for single persons it is €3,000, and the maximum rate at which relief will be given is 15% for first-time buyers and 10% for non-first time buyers.
(b) Bridging loan interest (s 245) and interest on money borrowed to invest in a company (s 248) or partnership (s 253) – but not a rental company.
(c) Compensation for change in work practices (disturbance money) (s 480).
(d) Pension contributions. The contribution limits, whether through an employer scheme (s 776) or Personal Retirement Savings Account (PRSA), or a self-employed retirement annuity scheme (s 787), are:
(i) aged under 30: 15% of earnings,
(ii) aged 30-39: 20% of earnings,
(iii) aged 40-49: 25% of earnings,
(iv) aged 50-54: 30% of earnings,
(v) aged 55-59: 35% of earnings, and
(vi) aged 60 or more: 40% of earnings.
This 40% limit also applies if you are a sportsman or sportswoman. If your contributions are paid through a payroll system, income tax, PRSI and universal social charge are charged on your salary net of contributions.
The overall annual earnings limit for pension contributions is €115,000 (s 787B). This figure may be indexed at the discretion of the Minister for Finance.
The maximum fund value you may have is €2,300,000 and the maximum tax-free lump sum that you can withdraw on retirement is €200,000.
The pensions levy applies on 30 June 2011 and the subsequent three anniversaries of that date, at 0.6% of the assets held in the pension fund (occupational pension schemes, personal retirement plans, personal retirement savings accounts, and retirement bonds). It does not apply to approved retirement funds (ARFs) (SDCA 1999 s 125B).
(e) Covenants. To be tax effective, a covenant must be payable to:
(i) a human rights body, or to a recognised college to carry out research, and exceed, or be capable of exceeding three years, or
(ii) an individual who is aged 65 or over, or permanently physically or mentally handicapped, and exceed, or be capable of exceeding six years.
The maximum part of your income that you can tax-effectively covenant is 5%, but this limit does not apply to income covenanted to an individual who is permanently physically or mentally handicapped (s 792).
(f) Stock relief (farmers). This is given at 25% of the increase in stock value (s 666), 100% if you are a young trained farmer (s 667), and 100% to the extent that proceeds of compulsory livestock disposals are reinvested in replacement livestock (s 668).
(g) Donations to Revenue-approved bodies. If you are self-employed, you can claim a deduction at your marginal tax rate. If you are an employee, you complete a form for the charity and the charity gets a refund at your marginal tax rate (s 848A). You can make donations in the form of quoted securities.
(h) Donations to approved sports bodies to fund capital projects. If you are self-employed, you can claim a deduction at your marginal tax rate. If you are an employee, you complete a form for the sports body and it gets a refund at your marginal tax rate (s 847A).