Employee Tax Credit

You can claim the Employee Tax Credit if you receive income that is taxable under the Pay As You Earn (PAYE) system. This includes:

  • wages
  • benefit in kind
  • occupational pensions
  • Department of Employment Affairs and Social Protection (DEASP) income.

You will also be entitled to this tax credit if you are an Irish resident and are in receipt of:

  • a social security pension received from another EU Member State
  • wages from abroad where tax was deducted under a PAYE type system.

Credit due

The amount you can claim will depend on the amount of your income. The maximum employee tax credit for 2017 is €1,650. If your yearly income is €8,250 or more you will be entitled to the full amount. If your income is below €8,250 then the amount of the credit is capped at 20% of your income. For example, if your yearly income is €5,000 the credit will be €5,000 @ 20% = €1,000.

If you are married or in a civil partnership and both of you have PAYE income, you are both entitled to claim the credit. You cannot transfer the credit to your spouse or civil partner.

You are only entitled to one Employee Tax Credit no matter how many employments you have.

The Employee Tax Credit cannot be claimed by:

  • proprietary directors, their spouse or civil partner on income directly related to that directorship 
  • the spouse, civil partner or child of a person paying the income
  • the spouse, civil partner or child of a partner in a partnership.

A proprietary director is a director who:

  • is the beneficial owner of a company
  • can directly or indirectly control more than 15% of the ordinary share capital of a company.

Children of proprietary directors can claim the credit if:

  • their job is in a qualifying Pay Related Social Insurance (PRSI) class
  • PAYE has been correctly deducted from their income
  • the child gives all of their time to the job
  • they are paid at least €4,572 per year. If they work part time this figure may be apportioned.

If you are not entitled to the Employee Tax Credit you may be entitled to the Earned Income Credit.

If you have income that qualifies for the Earned Income Credit and income that qualifies for the Employee Tax Credit, the amount of the combined tax credits cannot be more than €1,650.

How to claim

Use myAccount to claim this credit, using the PAYE Services area:

  • For the current year select 'Manage your tax' and add credits.
  • For previous years select:
    • click on 'Review your tax' link in PAYE Services
    • select the Form 12 for the relevant tax year
    • in the ‘Tax Credits and Reliefs’ page select ‘Earned Income Credit' and add it as a tax credit.