LAST UPDATE | 10 Oct 2023

THE RENT TAX Credit will rise to €750 next year as part of a suite of tax measures announced by the government.

Moreover, the tax break will be extended to parents who pay the rent of their student children living in ‘digs’. This will be backdated to allow for claims to be made for the years 2022 and 2023.

The €250 increase comes one year after the tax break was first introduced to help people who “do not get any other housing supports”, then-Finance Minister Paschal Donohoe said.

Minister @mmcgrathtd has announced that the rent tax credit is to increase from €500 to €750 per year and will be amended to include parents who pay for their student children who have tenancies in ‘Rent a Room’ or ‘digs’ accommodation. #Budget2024 pic.twitter.com/8hpQE4lGnQ

— Department of Finance (@IRLDeptFinance) October 10, 2023

Threshold, the national housing agency, has welcomed the increase and expansion of the rent tax credit and added that it hopes the measure can “form part of a wider cohesive approach to end the housing supply crisis”.

Who can claim it?

Tax-paying renters can claim the money back from Revenue as long as their landlord is registered with the Residential Tenancies Board (RTB). 

It can be claimed on an individual basis, so even those living with housemates or a partner can claim the full amount.  Married couples and civil partners can claim together for double the amount.

As of the end of September, over 290,000 claims have been made, totaling close to €166 million in tax breaks. It is estimated that 400,000 individuals eligible to apply in 2023.

Claimants will have up to four years to claim the credit. 

The tax credits will not be available to ‘supported  tenants’, such as those who avail of the Housing Assistance Payment (HAP), the Rental Accommodation Scheme, or a Rent Supplement Payment. 

People living in Cost Rental dwellings are also not entitled to it.

The scheme has received some criticism due to the requirement for landlords to be registered with the RTB. Some tenants were unable to avail due to this stipulation.

For parents of students, Revenue told The Journal the claimant’s child must have been under 23 at the start of the tax year in which the first started on a college course in order for the Rent Tax Credit to apply.

“Students who pay their own rent in ‘digs’ are already eligible to claim the Rent Tax Credit, no change has been made in respect of this,” a spokesperson added.

Tax package

Separately, landlords will next year get a tax break of up to €1,000. Those who avail of the cashback will have to remain in the rental market for four years if they avail of the credit.

They will be entitled to have rental income of €3,000 disregarded at standard tax rates in 2024, €4,000 in 2025 and €5,000 for years 2026 and 2027.

Finance Minister Michael McGrath also announced that the entry point for the higher rate of tax for PAYE workers in Ireland will increase to €42,000. 

The personal, Employee PAYE and earned income tax credits will all increase by €100.

A single person earning €46,000 in 2024 will see an increase of €2,000 in their net income as a result of cumulative income tax changes and USC changes since 2021, Minister McGrath said.

Changes to USC have also been announced with the 4.5% rate cut to 4% in the first reduction of USC in five years. 

Furthermore, the home carer tax credit and the single person child carer credit will both increase by €100. While the incapacitated child tax credit will increase by €200.

The USC concession, which applies to medical card holders and earn less than €60,000 per year is being extended for a further two years until the end of 2025. 

Responding to the announcement, Threshold said the tax break “needs to translate into improved security of tenure” and was disappointed that their previous recommendations of sliding scale system to tax rental income was not adopted.

You can find full details of today’s Budget announcement in our roundup here. 

Additional reporting by Muiris O’Cearbhaill