Examples of how social welfare payments are taxed
- Taxation of Maternity Benefit, Adoptive Benefit and Paternity Benefit
- More examples of how Maternity Benefit is taxed
- Taxation of Illness Benefit and Injury Benefit
- Taxation of Jobseeker’s Benefit and One-Parent Family Payment
- More information
Taxation of Maternity Benefit, Adoptive Benefit and Paternity Benefit
If you get Maternity Benefit, Adoptive Benefit, Paternity Benefit, Parent’s Benefit and Health and Safety Benefit, you are liable to pay income tax. The actual rate of tax you pay depends on your personal circumstances and the tax reliefs and tax credits you are claiming.
You do not pay Universal Social Charge (USC) and PRSI.
Example
The following example explains how Maternity Benefit is taxed. The same rules also apply to Adoptive Benefit, Paternity Benefit, Parent’s Benefit, and Health and Safety Benefit.
The Department of Social Protection (DSP) pays Maternity Benefit without deducting tax. However, the DSP will tell Revenue the amount of Maternity Benefit you are getting.
If you pay tax through the PAYE system, Revenue will (where possible) automatically reduce your annual tax credits and rate bands to account for the tax payable on your Maternity Benefit (see more examples of how Maternity Benefit is taxed below).
If you are self-employed and pay your tax through the self-assessment system, you should include details of any Maternity Benefit received in your annual tax return.
You can read more detailed information on how Maternity Benefit, Adoptive Benefit, Paternity Benefit, Parent’s Benefit, and Health and Safety Benefit are taxed (pdf) on Revenue's website.
More examples of how Maternity Benefit is taxed
If you pay tax through the PAYE system and you qualify for Maternity Benefit, you will probably fall into one of the following 3 categories:
1. You are paid your full or partial salary by your employer and your Maternity Benefit is paid directly to them.
Revenue will reduce your tax credits and rate band to account for the tax payable on your Maternity Benefit, and in this way collect the tax due. Revenue will then send a revised tax credit certificate to your employer. Your employer should only deduct tax, USC and PRSI on the difference between the salary paid and Maternity Benefit.
2. You are paid your full or partial salary by your employer and your Maternity Benefit is paid directly to you.
Revenue will reduce your tax credits and rate band to account for the tax payable on your Maternity Benefit. Your employer should deduct tax, USC and PRSI only on the amount of salary actually paid by them.
3. You do not get any salary while on maternity leave and your Maternity Benefit is paid directly to you.
Revenue will reduce your tax credits and rate band to account for the tax payable on your Maternity Benefit. They will then send a revised tax credit certificate to your employer. If your only income is Maternity Benefit, you will probably pay very little or no tax (since your total tax credits will probably exceed your total tax liability).
If you are not entitled to any pay on the usual pay day, you may contact your employer to request repayment of any tax that might be due. Alternatively, when you go back to work after maternity leave, any refund of tax which may be due can be calculated.
More information
You can find more information in our Case Study: Taxation of Maternity Benefit.
Taxation of Illness Benefit and Injury Benefit
If you are absent from work due to illness and you get (or your employer gets on your behalf) Illness Benefit or Injury Benefit, Revenue will take account of the amount of Illness or Injury Benefit paid when they adjust your tax credits or review the tax affairs of your spouse or civil partner.
You do not pay PRSI or USC.
The Department of Social Protection (DSP) tells Revenue the amount of taxable Illness or Injury Benefit you are getting, and the date the payment started. DSP does not tell your employer the amount of Illness or Injury Benefit you are getting.
Taxation of Jobseeker’s Benefit and One-Parent Family Payment
If you work and get Jobseeker’s Benefit (JB), the taxable part of your JB is collected by adjusting your tax credits and standard rate cut off point to account for the tax payable.
The One-Parent Family Payment is taxed in the same way. You don’t pay PRSI or USC.
More information
Read our page about taxation of social welfare payments.
If you have a question about your tax liability, you should contact Revenue. You can also visit Revenue's website for more information on the taxation of social welfare payments.
You may also want to contact your local Citizens Information Centre, to speak with an Information Officer.