What are tax credits?

Tax credits directly reduce your tax bill by a certain amount, rather than reducing your taxable income in the same way as tax relief. In Ireland, Revenue will give you a personal tax credit if you are an Irish resident. Depending on your personal circumstances, you may be able to claim additional tax credits.

Personal and employee tax credits were both increased to €2,000 each in 2025, providing immediate relief for workers. This was extended for 2026, providing continued relief. Additionally, the rent tax credit has expanded significantly to support tenants across the country. For individuals with an active home loan, mortgage interest tax credits were extended to cover the 2026 tax year if you had an outstanding balance between €80,000 and €500,000 on 31st December 2022, provided you meet the criteria. For 2026, the relief is calculated at 50% of the increase in interest paid over 2022, with a maximum capped credit of €625 per property.

Here is a summary of changes to tax credits over recent years:

The tax credit you get depends on whether you’re:

• Single

• Married or in a civil partnership

• Widowed or a surviving civil partner

• Separated

• Divorced or a former civil partner

• Renting a home or have a mortgage

You might be entitled to additional tax credits if, for example, you have a disability, are widowed or a home carer. All tax credits are listed in the tax rates, bands and reliefs chart.

Every Irish resident is entitled to personal tax credit. In 2026, the personal tax credit in Ireland is €2,000.

If you receive income that is taxable under the Pay As You Earn (PAYE) system, including wages and occupational pensions, for example, you can claim the employee tax credit. The maximum employee tax credit for 2026 is €2,000. If you are self-employed, you can claim the Earned Income Tax Credit, which also stands at €2,000 for 2026, ensuring parity for non-PAYE earners.

The Single Person Child Carer Credit is €1,900 for 2026, and can be claimed in addition to the personal tax credit.

The Single Person Child Carer Credit is for people who have children but are not cohabiting. If you have children and are separated, divorced, or a former civil partner, you are entitled to this tax credit. If the child resides with both parents for part of the year, only one parent can claim the full single person child carer credit, subject to Revenue guidelines.

The rent tax credit was introduced in 2022 to help tenants cope with rising accommodation prices. In 2025, the rent tax credit increased by €250, bringing it to €1,000 per person, and €2,000 for a jointly assessed couple. This credit has been extended for three further years and is now available until the end of 2028. Please note that tenants receiving state housing supports, such as the Housing Assistance Payment (HAP) or Rent Supplement, are excluded from claiming this relief.

If you're a homeowner with an active home loan, you might be eligible to claim mortgage interest relief on your primary residence. This specific relief is structured to ease financing costs for individuals whose mortgage interest payments have increased, and who had an outstanding loan balance between €80,000 and €500,000 on 31st December 2022.

You can lower your overall tax bill by claiming relief on a wide variety of out-of-pocket medical and dental costs. This health expense credit allows you to claim back 20% on qualifying medical bills you've paid for yourself or your family members, except for nursing home expenses providing 24-hour on-site care, which can be claimed at your marginal rate (up to 40%). Furthermore, as of 2026, pharmacist consultations and medicines prescribed under the new Common Conditions Service now qualify for the 20% tax relief. It's important to remember that you can only claim for expenses that aren't already covered by private health insurance or other public schemes.

Deposit Interest Retention Tax (DIRT) is automatically deducted from the interest you earn on standard savings accounts in Ireland. However, you can claim a full DIRT refund if you're officially exempt from income tax based on your age or personal circumstances. This tax return option typically applies if you're aged 65 or older, or if you're permanently incapacitated, provided your total annual income falls below the relevant statutory exemption limits.

• Age 65 or older: You pay €0 income tax if you earn under €18,000 as a single person, or under €36,000 as a jointly assessed couple.
• Under 65: Tax credits are used to lower your bill, potentially allowing standard single workers to earn up to €20,000 tax-free.
• Parents: Exemption limits increase by €575 for each of your first two dependent children, and €830 for each child after that.

In Ireland, you can earn up to €20,000 per year tax-free depending on your individual circumstances, which is applied using tax credits.

If you are not married or in a civil partnership, you are exempt from income tax if your total income is less than €18,000 per annum and you are 65 or older.

If you are married or in a civil partnership and jointly assessed, you are exempt from income tax if your total income is less than €36,000 per annum, or if either you or your spouse, is 65 or older.

If you have dependent children, your exemption limits are increased by €575 per child for your first two children; and €830 per child for each additional child.

Claiming your tax credits in Ireland is a straightforward process managed online through the Revenue Commissioners. You can register your claims by logging into the Revenue myAccount portal, where you can view your current tax profile and add missing credits for the active tax year. If you need to claim for previous periods, you can complete an income tax return to secure a refund for up to four years back. Once processed, your updated tax credit certificate is sent directly to your employer, adjusting your take-home pay automatically.

To help you quickly identify which relief options apply to your personal circumstances, use this handy checklist before submitting your annual tax return:

• Personal and employee credits: Available automatically to all qualifying residents and employees in Ireland, updated to €2,000 each for 2026.
• Rent tax credit: Available if you pay for private rented accommodation, offering up to €1,000 for single claimants or €2,000 for jointly assessed couples.
• Mortgage interest tax credit: Available to homeowners with an outstanding mortgage balance that was between €80,000 and €500,000 on their primary residence on 31st December 2022, subject to standard statutory criteria. 
• Health expenses: Available at a standard rate of 20% for qualifying out-of-pocket medical and dental costs that are not covered by private insurance or public schemes.
• DIRT refunds: Available if you are completely exempt from income tax, which typically applies to individuals aged 65 or older, or those permanently incapacitated whose total income is below exemption limits.
• Single Person Child Carer Credit: This totals €1,900 for 2026 and can be claimed in addition to the personal tax credit if you have children and are not cohabiting.

• Capped at PAYE: Your maximum possible refund is strictly limited to the amount of income tax deducted from your wages during that tax year.
• No roll-over: If your credits reduce your tax bill to zero, any leftover or remaining credit balance is lost and cannot be carried forward to the next year.

The net tax paid limit can sometimes be a source of confusion when calculating tax credits. In Ireland, tax credits are non-refundable (sometimes referred to as wastable credits), which means they can only be used to reduce your income tax liability based on what you actually paid through PAYE. 

For example, imagine a part-time worker earning €25,000 a year. Their initial gross tax bill is €5,000 (20% of €25,000). Their automatic Personal and Employee tax credits cover €4,000 of this, leaving them with exactly €1,000 in income tax paid via PAYE throughout the year.

At the end of the year, they submit a tax return to claim the maximum Rent Tax Credit (€1,000) and submit out-of-pocket Health Expenses that generate a further €300 credit. While their newly claimed credits total €1,300, their refund is strictly capped at the €1,000 they actually paid in tax. Their final tax liability is reduced to zero, yielding a €1,000 refund, but Revenue will not pay out the remaining €300 as a cash bonus or carry it forward to the next year.

• Tax credits: Directly cut your final tax bill euro-for-euro (e.g., a €1,000 credit equals exactly €1,000 off your bill).
• Tax reliefs: Reduce your total taxable income before tax is calculated. Their true cash value depends on whether you are taxed at the 20% or 40% rate.

While both ultimately lower your tax bill, tax credits and tax reliefs operate differently. Tax credits directly reduce your final tax bill on a euro-for-euro basis. A €1,000 tax credit means you owe exactly €1,000 less in tax. On the other hand, tax reliefs (often called tax deductions) reduce the amount of your gross income that is subject to taxation. The financial benefit of a tax relief is tied to your marginal tax rate. Additionally, some tax reliefs (like pension contributions) can also reduce your Universal Social Charge (USC) and PRSI liabilities, whereas tax credits strictly offset income tax.