John Connolly (Galway West, Fianna Fail)
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337. To ask the Minister for Finance the amount of tax revenue recouped annually by the Exchequer from carer’s allowance and carer’s benefit payments, including the impact of the real-time reporting and collection arrangements introduced from January 2026, and whether he has examined the estimated cost of making these payments fully tax-exempt (details supplied); and if he will make a statement on the matter. [29401/26]

Simon Harris (Wicklow, Fine Gael)
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Carers play a fundamental supporting role in society, and the Government are committed to supporting individuals and families with caring responsibilities. This is acknowledged by the broad range of commitments in the Programme for Government to improving supports for carers.

It is important to state that there has been no change in the Income Tax treatment of Carer’s Allowance and Carer’s Benefit. Carer’s Allowance and Carer’s Benefit are subject to Income Tax but are exempt from Universal Social Charge and Pay Related Social Insurance.

There 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. DSP had been reporting 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 but information for Carer’s Allowance and Carer’s Benefit has not previously been shared.

As data relating to Carer’s Allowance and Carer’s Benefit had not been shared between DSP and Revenue previously, it was the recipient’s responsibility to declare this income to Revenue. When a carer was granted the Allowance or Benefit, the DSP notice advised the carer that the Allowance or Benefit was taxable income. It was agreed by DSP and Revenue that from 1 January 2026, information on Carer's Allowance/Benefit payments will be included in the Taxable Payments Report shared directly with Revenue.

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. This aligns the taxation of Carer’s income with other taxable DSP payments and significantly reduces the risk of an end-of-year liability.

It should be noted that not all carers who are in receipt of Carer’s income will have a tax liability, particularly if their income level is below the taxation threshold, or they have sufficient tax credits to reduce their liability to nil. A person’s tax liability will depend on their individual personal circumstances, income levels and personal credits available to them and their family.

I am advised by Revenue that income tax liabilities are assessed in the round and are not calculated separately for each source of income. Various income sources are added together to arrive at a gross income, and then reliefs and deductions are applied to arrive at a taxable income. The various tax rates are then applied to the taxable income figure, having account of their standard rate cut off point, to arrive at a gross liability. Finally, tax credits are deducted from this gross liability to arrive at the net liability, which is the final liability owed. Based on how the income tax system operates, as outlined above, it is not possible to identify a net tax liability associated with one component of income.

As previously noted the sharing of data on recipients of Carer’s Allowance and Carer’s Benefit by the DSP only commenced on 1 January 2026. Therefore, it is not currently possible to estimate a cost associated with making these payments tax exempt as the cost depends on the recipients’ total income and their total tax credits and reliefs for the tax year, which will not be known until the year has concluded and taxpayers are given the opportunity to confirm their incomes, reliefs and credits by way of filing their income tax return. On this basis, it is not currently possible to estimate the cost associated with making these payments exempt based on 2026 data.