Tax implications for married couples and civil partners

If you recently got married or registered a civil partnership, you can expect tax benefits in the form of tax relief and refunds. If you want to avail marriage tax credits, you can split your tax liability between you and your partner. This way, not only can you reduce your tax burden, but you could also receive a refund in certain cases. Read on to learn more about how to divide tax credits when married or in a partnership. 

Under the Irish tax system, there are some tax implications and benefits for married couples. For instance, the Married Person’s Tax Credit allows a tax credit to be divided between spouses or civil partners who are jointly assessed for tax.

There are three ways you may be taxed after marriage or civil partnership:

1. Assessment as a single individual

2. Joint assessment

3. Separate assessment

It also depends on whether both you and your partner are working, whether one is earning more than the other, or if you have children. You may check your eligibility on Revenue.ie to claim the benefits of marriage tax credits. 

Married couples and civil partners in Ireland are often subject to different tax bands compared to those who are single. As per the Budget 2024 announcement, the tax bands for married couples and civil partners will change from €49,000 to €51,000 (single income) and €49,000 to €51,000 (combined income with a maximum increase of €33,000). The tax rate is 20% up to €51,000 and 40% for the balance.

Couples can choose joint assessment or separate assessment for tax purposes. Under joint assessment, you are taxed on your combined income. You could even choose to transfer your tax credits and tax bands to your partner, if both of your incomes are taxable. This might help reduce your overall tax liability. 

Example: John and Ronan are in a civil partnership. John earns €52,000 a year, while Ronan earns €20,000 a year. Here’s how their tax payable is calculated:

When it comes to separate assessment, you and your partner are assessed as single individuals for the purpose of the tax year. The married couple tax credits or civil partnership tax credits are divided equally between the two.

You can select whether you or your partner will be jointly or separately assessed for the tax year on Revenue Online Services (ROS).

Yes, married couples or civil partners pay less tax provided you meet the required criteria in terms of tax bands and tax credits. For instance, you may be eligible for a tax refund if the tax you pay as two single individuals is greater than the tax you would pay as a married couple. The difference will be calculated after December 31st of the year in which you get married. 

You can apply for marriage tax credits online by contacting Revenue.ie through your account by March 31st of the year when you want the change. You may even send a physical letter to Revenue, signed by both you and your partner. This allows you to nominate or change which partner will be the main assessee.

On the ROS website, log in to myAccount to change tax credits, tax bands, and choose assessable income for the tax year. You can even send a physical letter signed by both you and your partner to Revenue Ireland. If nothing is selected, then the person with the higher income is taxed. 

If you’ve applied for marriage tax credits in Ireland once, there’s no need to reapply every year. The personal allowance of the non-tax paying partner will automatically transfer to the higher-earning partner.

However, it's your responsibility to notify the Revenue Commissioners if your situation changes, and you no longer qualify for this tax benefit. In the case of separation, you should contact the tax office to inform them of this change.