Tax Relief on Pension Contributions

I have been told that making a contribution to my pension will reduce my tax bill. Is there a limit to what I can contribute and how much relief will I get?

2nd September 2016

The amount of tax relief you can get on your own contributions to a pension depends on your age.

Tax relief is given at your marginal (highest) tax rate which is currently 40% e.g. there is potential tax relief of €400 on a pension contribution of €1,000. But there is no relief in respect of PRSI and the Universal Social Charge.

Age  Contribution Limits for Tax Relief
% of Net Relevant Earnings
Under 30 15%
30-39 20%
40-49 25%
50-54 30%
55-59 35%
60 and over 40%

For everyone, there is a maximum annual amount of earnings for which tax relief is given. In 2015, this was €115,000.

If you make contributions, but do not get tax relief on them because you exceed the tax relief limits, you can apply for tax relief on these contributions in the future.

Pension contributions are of most benefit if you are paying tax at the higher rate i.e. your earnings for the year are in excess of €33,800.

If you make a qualifying pension contribution before the tax deadline of 31 October 2016 you can offset that against your tax bill for 2015.

Disclaimer: Advice shared in this blog is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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Call us today to make an appointment at your local office

1890 98 76 09

Or submit an enquiry