Income Tax Rates and Exemptions

Just a quick synopsis of the current income tax rates and exemptions:

Income tax rates

Individuals and married couples

A married person can opt to be assessed for tax purposes via:

1. joint assessment on the husband (s 1017) or wife (s 1018), separate assessment (s 1023), or
2. single assessment (s 1016).
An individual who is separated or divorced and not remarried, may by agreement with the ex-partner, opt for joint or separate assessment (s 1026).

The current tax rates are the standard rate (20%) and the higher rate (40%).

The 2015 standard rate bands are:
€33,800 in the case of an individual,
€37,800 in the case of a one parent family and
€42,800 in the case of a married couple (s 15(2)).

In the case of a dual income married couple, the €42,800 rate band may be increased by the lower of:

1. €24,800, and
2. the income of the second spouse.

Therefore the maximum standard rate band a dual income married couple may have is €67,600. However, the maximum part of the standard rate band that may be transferred between the partners of a dual income married couple in a tax year is €42,800.

Exemptions

Exemption limits

An individual aged 65 or over with total income below €18,000 is exempt. In the case of a married couple, one of whom is aged 65 or over, the threshold is €36,000.
If the claimant has dependent children, the exemption limit is increased by €575 for each of the first and second child, and €830 for the third child and eachsubsequent child.

Other exemptions

The other main exemptions from income tax are:

1. Personal injury settlements (s 189), payments from the Haemophilia HIV Trust (s 190), Hepatitis C compensation (s 191), and payments in respect of thalidomide victims (s 192).
2. Income of artists, writers and composers, subject to an overall annual limit of €50,000 (s 195).
3. Interest on savings certificates (s 42) and instalment savings schemes (s 197).
4. Income of recognised charities (s 207, 208).
5. Income of amateur sports bodies (s 235).
6. Rent from let farm land (s 664). A claimant must be aged 55 or over, or unable through physical or mental incapacity to carry on farming.
   Exemption is given for the lower of:
   1. the farm rental income surplus, or
   2. €40,000 where the lease is for more than 14 years, €30,000 where the lease is for 10 to 14 years, €22,500 where the lease is for seven to 10 years, or €18,000 in any other case.
7. Rent-a-room relief (s 216A). Income from lodgers is exempt provided your gross income from such letting does not exceed €12,000 in the tax year.
8. Home childcare earnings of up to €15,000 in the tax year (s 216C).
9. Earnings of special assignees (s 825C). 30% of income above €75,000 in the case of employees assigned from a tax treaty country to work in their employer’s Irish operation.
10. Start Your Own Business relief (s 472AA). Where a person previously long-term unemployed person sets up a business, the first €40,000 of profits in a tax year are exempt. Expires 31.12.2016.

Article re-produced with the kind permission of Taxworld. (www.taxworld.ie)