Dáil Éireann Debate, Wednesday - 14 January 2026
37. Deputy Mairéad Farrell asked the Tánaiste and Minister for Finance to provide details of the changes to the way in which income from carer's allowance is assessed for tax in 2026; and if he will make a statement on the matter. [2621/26]
Amharc ar fhreagraThere is a long-standing data sharing arrangement between both Revenue and the Department of Social Protection (DSP) which facilitates the operation of both the tax and welfare systems. Data has been shared in relation to taxable welfare payments such as pensions and long-term benefit payments for a number of years, which allows tax to be deducted through the year in real-time, instead of creating a full year’s tax bill at the end of the year.
This has not previously been the case for Carer’s Allowance and Carer’s Benefit. As this data had not been shared between DSP and Revenue previously, it has been the recipient’s responsibility to declare this income to Revenue in a tax return. Carer's Allowance and Carer's Benefit are subject to Income Tax but are exempt from USC and Pay Related Social Insurance.
From 1 January 2026, Revenue is receiving information on Carer’s Allowance as well as Carer’s Benefit payments from DSP. DSP already report information on a significant number of taxable DSP payments to Revenue, including Jobseekers Benefit, Maternity Benefit, One-Parent Family Payment, State Pension (Contributory or Non-Contributory) and Bereaved Partners Contributory Pension. The reporting by DSP of Carer’s Allowance and Carer’s Benefit brings the treatment of them in line with these other DSP payments.
Where a person in receipt of payments from DSP also has an additional source of employment or occupational pension income, the mechanism used to collect tax due is by reducing the person’s annual tax credits and rate band, by the annual amount of their DSP income. This ensures that the DSP payment is paid gross to the recipient, while the salary or pension, as paid by their employer, will have any tax due on both the DSP income and the employment deducted from it.
The DSP now provides Revenue with information detailing the taxable amount of carer’s income received. This means that any tax due on carer’s income will be deducted throughout the year via a reduction in tax credits and rate bands in the same manner as other taxable DSP payments. This will minimise the risk of a recipient owing tax on carer’s income at the end of 2026, as they will be paying the correct tax due on their income throughout the year. If an individual stops receiving a carer's payments during the year, DSP will notify Revenue, and an amended Tax Credit Certificate will issue to confirm the recipient’s records have been updated accordingly.
A person’s tax liability will depend on his or her personal circumstances, available tax credits, and any other income that her or she may have. Many of those who receive Carer's Allowance will not have a tax liability, due to their income level being below the taxation threshold, or they have sufficient tax credits to reduce their liability to nil.
I have been informed by Revenue, that in conjunction with the DSP, they met with Family Carers Ireland and Care Alliance Ireland last year to confirm information detailing the taxable amount of carer’s income would be shared in the same way they do for the State Pension and other taxable DSP payments mentioned above.
