Dáil Éireann Debate, Tuesday - 10 February 2026
397. Deputy Robert O'Donoghue asked the Tánaiste and Minister for Finance if he will confirm that carer’s allowance and carer’s benefit are treated as taxable income for income tax purposes; to clarify under which tax codes or Revenue rules this treatment is applied; and if he will make a statement on the matter. [9336/26]
View answerCarers play a fundamental supporting role in society and the Government is committed to supporting individuals and families with caring responsibilities. This is acknowledged by the broad range of commitments in the Programme for Government to improving supports for carers.
It is a general principle of taxation that, in the absence of a specific exemption, income from all sources, in general, are subject to tax.
Section 19 of the Taxes Consolidation Act 1997 (TCA 1997) provides that income from offices or employments, and from annuities, pensions or stipends payable out of State funds, is within the charge to tax under Schedule E. Section 112 TCA 1997 charges income tax on all Schedule E income received in a year, with the exception of proprietary directors who pay tax in the year the income arises. Therefore, all payments from the Department of Social Protection (DSP) are considered taxable under Schedule E unless specifically exempted from income tax.
Section 126 (6A) TCA 1997 provides for the exemption of certain payments from the DSP from income tax which are listed in the table within Section 126 TCA 1997. As Carer’s Allowance and Carer’s Benefit are not listed as exempt payments within this table, they are therefore taxable and subject to Income Tax. As such, Carer’s Allowance and Carer’s Benefit has always been taxable and there is no change in this regard. They are, however, exempt from Universal Social Charge (USC) and Pay Related Social Insurance (PRSI).
While Carer’s income is subject to tax, a person’s tax liability will depend on his or her personal circumstances, available tax credits, and any other income that he or she may have. It should be noted that not all carers who are in receipt of Carer’s income will have a tax liability, particularly if their income level is below the taxation threshold, or they have sufficient tax credits to reduce their liability to nil. The level of income tax payable, if any, on such income is determined by the personal circumstances of the recipient, taking into account factors such as the individual's other sources of income and the available tax credits and standard-rate band.
Taxpayers can claim any additional credits or reliefs such as health expenses and declare any additional income for the relevant period by submitting an annual tax return. Once the return is submitted, the additional income declared will be included for the purposes of calculating their tax liability.
Revenue have confirmed that it is not carrying out a review of prior years in respect of Carer’s Allowance or Carer’s Benefit, solely as a result of this change. The focus of the new process is on the timely collection of any tax on a forward-looking basis. However, should an underpayment of income tax arise on foot of the declaration of taxable income such as Carer’s Allowance or Carer’s Benefit, Revenue will seek to minimise any potential hardship in such cases, by collecting the liability through a reduction of a taxpayer’s tax credits over an extended 4-year period, from 2027 onwards.
I am further advised that Revenue is open to engaging with taxpayers on their individual circumstances and will work with them to agree appropriate arrangements where needed.
