Pension Tax Relief in Ireland

Contributions to an approved pension get income tax relief at your highest rate, which is 40% if your pay is above the cut-off and 20% if it is not. The relief is limited to a percentage of earnings that rises with age, from 15% under 30 to 40% from age 60, and only the first €115,000 of earnings counts. It reduces income tax only; USC and PRSI are still charged on the full gross pay.

These rules apply to employees' own contributions, including additional voluntary contributions, and to personal pensions such as PRSAs. They are Revenue's figures as of October 2026.

The age-related limits

Earnings are capped at €115,000 for this purpose. A 45-year-old on €150,000 can therefore get relief on contributions up to 25% of €115,000, which is €28,750, not 25% of €150,000. For employees, earnings mean gross pay. For the self-employed they mean net relevant earnings, which are profits after allowable expenses. Relief applies only to the income source the contributions relate to, and your employer's contributions are not counted when measuring your own limit.

Two more limits, applying the same percentages: a 28-year-old on €35,000 can get relief on up to €5,250 (15%), and a 52-year-old on €70,000 on up to €21,000 (30%). Most people contribute well below these ceilings, so the cap matters mainly to older, higher-paid savers catching up.

Worked examples

Relief at the marginal rate means the saving depends on where your taxable pay sits relative to the €44,000 cut-off for a single person in 2026.

The straddling case shows how blended relief works. At €46,000, €2,000 is taxed at 40% and the rest at 20%. After a €5,000 contribution taxable pay is €41,000, so the €2,000 above the cut-off disappears (saving €800) and a further €3,000 is relieved at 20% (saving €600), giving €1,400 in total. Income tax before credits falls from €9,600 to €8,200. The calculator on this site applies this logic when you enter a pension percentage. See gross vs net salary for the effect on a payslip.

How the relief is given

If your employer runs a pension scheme and deducts your contribution from pay, the relief is normally applied through payroll, so you see lower tax each month. If you pay into a PRSA or make additional voluntary contributions yourself and the relief has not been given, you can claim through Revenue myAccount, using the review of the last four years and the Tax Credits and Reliefs section. For AVCs you will need a copy of the certificate or a detailed receipt. Self-employed people claim on the Form 11 return in ROS.

Because you can claim relief for four tax years, a missed contribution claim can be part of a refund. The process is described in how to claim a tax refund.

What pension relief does not do

• It does not reduce USC or PRSI. Both are charged on gross pay before pension contributions, as Revenue instructs employers. On a €60,000 salary that is €1,332.82 of USC and €2,610 of PRSI whatever you contribute.
• It is not unlimited. Contributions above your age limit, or on earnings above €115,000, get no relief that year.
• It is not the same as tax-free money. Relief is given on the way in, but pension income is taxed when you draw it, and the Standard Fund Threshold, set at €2.2 million according to Citizens Information, caps the tax-favoured fund. Tax at 40% applies to any excess.
• It does not guarantee the benefit of 40%. If your pay is below the cut-off, each euro saves 20 cent, not 40.

At retirement, Citizens Information states that the first €200,000 of a lump sum is tax-free, the next €300,000 (up to €500,000) is taxed at 20%, and anything above that is taxed at your marginal rate. These are outside the scope of the calculator, so check the position with the scheme administrator or a regulated adviser before making large contributions.

If your employer matches contributions, the match is on top of your own and does not use up your own age-related limit, which makes it worth contributing at least enough to receive it. Ask for the scheme rules in writing.