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Exemption and marginal relief

  1. Overview
  2. Exemption limits
  3. How to calculate your total income
  4. Marginal relief

Marginal relief

If your total income is more than the exemption limit, you may still be able to claim marginal relief.

Marginal relief is available where:

  • you, or your spouse or civil partner, is over 65
  • and
  • your total income is less than twice the exemption limit.

Marginal relief restricts your Income Tax payable to 40% of the difference between your total income and your exemption limit. Where marginal relief is granted, you receive no further credits on your income.

Marginal Relief will only be given to you where it is more beneficial than using your tax credits.

You may have been granted marginal relief in a year, but feel that claiming additional tax credits would have been more beneficial. Where this occurs, you can claim your credits on your Income Tax Return (Form 12) using myAccount as normal.

Revenue will then calculate the Income Tax payable using your credits and compare to your tax payable under marginal relief. If the Income Tax payable is lower using your credits, we will reduce your Income Tax charge accordingly.

  • Example

    Jim, aged 68, is married. He is jointly assessed. He has 2 dependent children and income of €38,000 for 2024. He is allowed a total tax credit of €6,115 which is made up of the following:

    Jim's total credits
    CreditsAmount
    Personal tax credit €3,750
    PAYE tax credit €1,875
    Age tax credit €490
    Total €6,115

    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%)
    Total income€38,000
    Tax @ 20% €7,600
    Less tax credits €6,115
    Tax due €1,485

    If marginal relief was applied, Jim’s tax liability would be calculated as follows:

    Taxed under marginal relief (40%)
    Total income€38,000
    Less exemption €37,150
    Excess €850
    Tax due @ 40% €340

    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 2024 will be €340.

Published: 22 December 2023 Print this page

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