187 Exemption from income tax and associated marginal relief

Summary

This section provides exemption from income tax for individuals with income not exceeding €10,420, in the case of certain married persons, and €5,210, in the case of single and widowed persons. In addition, the exemption limits are increased by €575 in respect of each of the first 2 qualifying children and by €830 in respect of each subsequent qualifying child. The section also provides for marginal relief where an individual’s total income exceeds the appropriate exemption limit applicable to that individual, but does not exceed a sum equal to twice that exemption limit.

Details

Exemption limits

(1) In the case of an individual entitled to the married person’s tax credit under section 461(a), the exemption limit is €10,420. In any other case (that is, a single person, a widowed person or a married person assessed as a single person), the exemption limit is €5,210. The exemption limit is known as “the specified amount”.

Additional amount for children

(2) Where an individual proves that he/she has living, at any time during the year of assessment, a qualifying child, the exemption limit is increased by €575 in respect of each of the first 2 qualifying children and by €830 in respect of each subsequent qualifying child. Any question as to whether a child is a qualifying child is determined in the same manner as it would be for the purposes of section 462 (one-parent family tax credit). The additional amount for qualifying children applies also for the purposes of the age exemption provided for in section 188.

Joint entitlement to additional amount for a child

(3) Where 2 or more individuals would be entitled to an increase in the specified amount in respect of the same child —

• only one increase is allowed per child,
• where the child is maintained by one individual only, that individual only is entitled to the increase,
• where the child is maintained by more than one individual, each individual is entitled to claim such part of the increase as is proportionate to the amount expended by him/her in relation to the total amount expended by all individuals towards the maintenance of the child, and
• in ascertaining, for the purposes of entitlement to the additional allowance, whether an individual maintains a child, any payments made by him/her towards the maintenance of the child which he/she is entitled to deduct in computing his/her total income for the purposes of the Income Tax Acts is deemed not to be a payment towards the maintenance of the child.

Exemption from tax

(4)(a) Where an individual makes a return of his/her total income on the appropriate form and proves that his/her total income for a year of assessment does not exceed the appropriate exemption limit for that year, that individual is exempt from income tax.

Marginal relief

(4)(b) Where an individual makes a return of his/her total income on the appropriate form and proves that his/her total income for a year of assessment does not exceed a sum equal to twice the exemption limit applicable to that individual for that year, the amount of tax payable by that individual is limited to 40 per cent of the amount by which the individual’s total income exceeds the exemption limit applicable to that individual.

Cessation of section

(5) This section ceases to have effect on or after 1 January 2008.

Relevant Date: Finance Act 2021