Tax Relief on Pensions

Tax Relief on Pensions

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Tax reduction is available to anybody who makes pension contributions to certain pension plans (including AVCs – extra voluntary contributions). Employees and self-employed persons are both eligible for relief at their higher tax rate, subject to the limitations outlined below. This implies that if you opt to contribute €500 to your pension, you will get €500 in your pension account. Otherwise, you'd only get €400 or €300 in your palm since the rest would be taxed at a rate of 20% or 40%, depending on your wages.

Allowable pension products

• Occupational and statutory pension schemes
• PRSA’s
• Qualifying overseas pension plans
• Retirement Annuity Contracts (RAC’s)

Limits on pension contributions

Tax relief is subject to two main limits:

1. Age-related earnings percentage limit

You can get tax relief up to the relevant age-related percentage limit of your earnings in any year.

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• Under 30: 15%
• 30-39: 20%
• 40 49: 25%
• 50-54: 30%
• 55-59: 35%
• 60 +: 40%
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2. Total earnings limit

The maximum amount of earnings taken into account for calculating tax relief is €115,000 per year.

Employer PRSA contributions are:

• treated as made by the employee for tax relief purposes.
• treated as a taxable employer benefit received by the employee.
• included in the employee’s actual contributions to determine if the limits discussed above have been reached.
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You can make a one-time donation after the end of a tax year but before October 31 of the following year. If you do, you can elect to get tax relief for donations made in a previous tax year on or before October 31.

Your employer will normally deduct the contributions from your wages and provide you with the tax reduction you are entitled to. If you have a private pension and your employer does not deduct payments, you can claim the relief using Revenue MyAccount.

How to claim the relief when self employed

Self-employed people should file a tax return (Form 11) on ROS to get tax reduction on their pension contributions.

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