Jim is married and 68 years old. He is jointly assessed. He has 2 dependent children and income of €38,000 for 2023. He is allowed a total tax credit of €5,815 which is made up of the following:
Jim's total credits
|Personal tax credit
|PAYE tax credit
|Age tax credit
The exemption limit that applies to him is €37,150 (€36,000 + €575 + €575) as he is jointly assessed with two dependent children.
He is not entitled to the Income Tax exemption as his income is greater than his exemption limit. However, his income is less than twice his exemption limit so marginal relief may apply.
If marginal relief was not applied, Jim’s tax liability would be calculated as follows:
Taxed under normal system (20%)
|Tax @ 20%
|Less tax credits
If marginal relief was applied, Jim’s tax liability would be calculated as follows:
Taxed under marginal relief (40%)
|Tax due @ 40%
In this case, marginal relief is more beneficial to Jim than using his tax credits. Revenue will grant Jim marginal relief and his Income Tax liability for 2023 will be €340.