DIRT Tax in Ireland: How It Works and How Much You Actually Keep
What is DIRT?
Deposit Interest Retention Tax (DIRT) is the withholding tax Irish banks and credit unions deduct from the interest on regular deposit accounts. It is applied at source — the bank takes the tax out before paying you the interest, and remits it directly to Revenue. From your side, you never see the gross figure unless you go looking for it.
DIRT is a final tax rather than a withholding against your year-end income tax bill. For most savers, that means there’s nothing to declare and nothing to claim — the tax is settled the moment the interest is credited. The exception is the small number of groups (over-65s on low incomes, charities, certain first-time buyers using Help-to-Buy) who can claim either exemption upfront or a refund after the fact.
The 2026 DIRT rate
DIRT is 33% in 2026 — the same rate as every year since 2020. The rate has been remarkably stable; you have to go back to the post-austerity reductions of 2017-2020 for the last time it moved. Successive Budgets (including Budget 2026) have left it untouched.
A short timeline for context:
| Year | DIRT rate | Notes |
|---|---|---|
| 2014 | 41% | Post-crisis peak |
| 2017 | 39% | First reduction step |
| 2018 | 37% | |
| 2019 | 35% | |
| 2020 onwards | 33% | Current rate |
The rate sits alongside (but is separate from) the 41% exit tax that applies to investment funds and life-assurance bonds. The structural difference matters — see “DIRT vs other tax-sheltered options” below.
How DIRT is applied
DIRT is straightforward arithmetic. Take €10,000 on deposit at 3% AER:
- Gross interest after one year: 3% × €10,000 = €300.
- DIRT at 33%: 33% × €300 = €99.
- Net interest credited to the account: €300 − €99 = €201.
- Net effective rate: 2.01% AER after DIRT.
The bank does the calculation and posts the net figure to your statement. Anti-fraud rules require the bank to apply DIRT regardless of whether you’re a basic-rate, higher-rate, or zero-rate taxpayer — the rate is flat across all savers and all account sizes.
A useful mental shortcut: after-DIRT return ≈ headline AER × 0.67. A 4% account returns roughly 2.68% net; a 2% account returns 1.34% net.
Who can claim DIRT back?
Four main groups can either claim DIRT exemption (so the bank doesn’t deduct it in the first place) or a refund after the fact:
- Over-65s on low total income: full exemption if total annual income is at or below €18,000 (single) / €36,000 (married/civil partnership combined). Both the saver and their spouse must be 65 or over for the joint figure to apply.
- Permanently incapacitated: full exemption regardless of age. Requires Revenue Form DE1.
- First-time buyers using Help-to-Buy: DIRT paid in the four years before the HTB claim can be refunded as part of the HTB rebate (up to a cap).
- Registered charities and certain religious bodies: exempt under specific charity-status conditions.
The over-65 exemption is the most common in practice. To claim it upfront (rather than after the fact), submit Revenue Form DE1 to your bank — they’ll start crediting interest gross. To claim a refund after DIRT has already been deducted, file Form 54D Claim with Revenue.
DIRT vs other tax-sheltered options
DIRT applies to deposit accounts only. Other Irish savings products sit under different regimes — sometimes more favourable, sometimes less. A quick comparison:
| Product | Tax regime | Headline rate | Net effective rate (basic-rate saver) |
|---|---|---|---|
| Bank deposit account | 33% DIRT | 3.0% AER | 2.01% |
| Credit union dividend | 33% DIRT (since 2014) | 0.5% typical | 0.34% |
| Prize Bonds (State Savings) | Tax-free | ~0.6% expected (variable) | 0.6% |
| Savings Certificates (State Savings) | Tax-free | 0.98% AER over 5 years (2026 issue) | 0.98% |
| Investment fund / ETF | 41% exit tax | Variable | (Lower, plus 8-year deemed disposal) |
| Pension contribution (PRSA/AVC) | 40% income tax relief at marginal rate | Variable | Net cost ≈ 60% of gross contribution |
The two takeaways: State Savings products are DIRT-free and look much better than headline rates suggest for tax-conscious savers; investment funds pay 41% exit tax rather than 33% DIRT, which is worse on the rate but better on the asset class (equities have historically outpaced deposits).
Note: this is not financial advice. Tax outcomes depend on individual circumstances — speak to an authorised adviser before allocating significant savings.
Use the Savings Goal Calculator to see how much to put aside each month and how the compound after-DIRT growth gets you to a target.
Comparing savings accounts on an after-DIRT basis
Headline AER figures are gross. When you compare two accounts in the same regime (both deposit accounts subject to DIRT), the gross AER is enough for a ranking. But when you’re comparing deposit vs State Savings vs investment fund, you need to apply each regime’s tax separately.
A worked example: €25,000 saved over 5 years, three options:
| Option | Headline rate | Net effective rate | Value after 5 years (compound) |
|---|---|---|---|
| Bank fixed-term deposit, 3.5% AER | 3.5% gross | 2.35% after DIRT | €28,083 |
| State Savings 5-year Savings Cert | 0.98% AER | 0.98% (tax-free) | €26,250 |
| Equity ETF returning 6%/year | 6% gross | (See note) | (Not directly comparable) |
For the equity ETF, exit tax is 41% on the gain, not the value, and the 8-year deemed disposal rule means tax is paid every 8 years even without selling. A €25,000 investment growing at 6% to €33,460 after 5 years would owe 41% × €8,460 = €3,469 if sold — leaving €29,991. Higher than the deposit, but with equity volatility on the downside.
The lesson: deposit accounts are easy to compare on AER, but as soon as another regime enters the picture, model the after-tax return rather than the headline rate.
Frequently asked questions
Is DIRT payable on Prize Bonds? No. Prize Bond prizes are paid tax-free as a State Savings product. The trade-off is that the expected annualised return is around 0.6%, with most savers winning nothing in a given month.
Are credit union dividends subject to DIRT? Yes, since 2014. Before then most credit-union savings sat outside DIRT under “Friendly Society” rules; that exemption was withdrawn in Finance Act 2013 and dividends paid from 2014 onwards have been DIRT-able.
Can I offset DIRT against other taxes? Generally no — DIRT is a final tax. The exception is when you’ve overpaid because of an exemption claim made late (e.g. an over-65 who didn’t file Form DE1 in time and had DIRT deducted anyway). In that case you claim a refund using Form 54D Claim.
Does DIRT apply to children’s accounts? Yes, but minors below the income-tax exemption thresholds can claim it back — Revenue has a specific process for parents to claim DIRT refunds on a child’s deposit interest. It’s only worth doing for substantial children’s savings.
What about cross-border interest from UK or EU banks? Irish residents are liable for DIRT (or an equivalent) on foreign deposit interest. You declare the gross interest on your annual return and pay DIRT at the standard 33%, with credit for any foreign withholding tax that applied at source. The mechanics vary by country — speak to an accountant if it’s a meaningful amount.
Will DIRT rise in future Budgets? Politically, DIRT is sticky — it generated less than €70 million in 2024 (low because deposit rates were low) and so isn’t a major Exchequer lever. The more likely change is in the parallel exit-tax regime, where there’s an active ongoing Department of Finance review.