Calculating Income Tax

Understanding Tax Credits to increase your take home pay

Getting the most from your Pay – use your Tax Credits

Every individual earning an income in Ireland is obliged to pay Income Tax.  While different rules apply to different people depending on their status (single, married, civil partners, divorced) the same basic principles apply to all.

A person’s Gross Income Tax liability is calculated on their taxable income.  Each individual is entitled to an amount of tax credits, used to reduce the gross tax liability.  The nature and amount of tax credits to which a person is entitled depends on the personal circumstances.

No income tax is payable where the tax credits exceed the gross tax liability. Tax credits can only be used to reduce the tax liability, they cannot be refunded where they exceed the persons gross income tax liability.

Employees in Ireland are taxed through the PAYE (Pay As You Earn) system.  This means that their employer will calculate their tax liability on their earnings in every pay period.  There is no need for employees to make separate returns and payments to the Collector General office so long as their only source of income comes from their employer/s in Ireland.  The PAYE system in Ireland places the onus on employers to identify, calculate and submit the correct taxes to the Revenue Commissioners for their employees.

The amount of income tax payable by the employee depends on how much they earn, their tax credits and their Standard Rate Cut Off Point (SRCOP) which is determined by their personal circumstances.

The amount of tax credits and the SRCOP is stated on the employee’s tax credit certificate but it is up to the employee to notify Revenue of their personal circumstances that will affect those credits.

Over the next few weeks, our blogs will explain some of the different tax credits available to employees in Ireland.  These will include:

  • PAYE Tax Credit
  • Single/Widowed Person or Surviving Civil Partner Tax Credit
  • Married Couple or Civil Partnership Tax Credit
  • Age Tax Credit
  • Dependent Relative Tax Credit
  • Blind Person Tax Credit
  • Home Carer Tax Credit
  • One Parent Family Tax Credit
  • Widowed Person Tax Credit (With and without dependents)
  • Widowed Person/Surviving Civil Partner Year of Bereavement Tax Credit
  • Incapacitated Child Tax Credit
  • Trade Union Tax Credit
  • Tax Relief for Tuition Fees
  • Local Authority Service Charge Tax Credit
  • Mortgage Interest Relief
  • Tax Relief for Rent Payments
  • Employed Person taking care of Incapacitated Individual
  • Medical Insurance Relief
  • Health Expenses
  • Tax Relief for Expenses incurred in Employment
  • Revenue Job Assist



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