Tax Credit

A tax credit in the Irish system is a flat-euro reduction in the income tax due, applied after the tax is calculated. €1 of credit cancels €1 of tax — unlike a tax allowance, which only saves tax at the marginal rate (40% or 20%). Tax credits make the system progressive at the bottom: anyone with less tax due than the value of their credits pays no income tax at all.

The two universal credits that almost every Irish PAYE worker receives are:

• Personal tax credit: €2,000 (single), €4,000 (married/civil partner jointly assessed).
• Employee PAYE tax credit: €2,000 — for income subject to PAYE only.

Together they shield about €18,000 of income for a single worker from income tax — although USC and PRSI still apply on top.

Many other credits exist depending on circumstance: home-carer, single-person child-carer, age, dependent relative, blind, rent (capped, for renters under a threshold), and the broad menu of medical and educational expense credits. Some are claimed automatically; others require an application through Revenue’s myAccount portal.

Tax credits do not reduce USC or PRSI — those are calculated on gross income and are not credit-relieved. They only reduce the PAYE component. Use the tax credit calculator to estimate your combined credit entitlement, or the income tax calculator for the full PAYE picture.