Tax for Married Couples | Ireland | ADW Accountants and Business Advisors

Married or not, who pays the least tax?

Are you paying much of your earnings on taxes? What if you’re told that you can reduce your taxes just by .. getting married? You heard it right. As much as you would hate marriage proposals or getting hitched, there are benefits especially when paying taxes (read, your hard earned money). Married people (both working or one of them working) end up paying less tax than the ones who are single or in a cohabiting relationship. How? Why?

Preference for families by the tax system

The tax system has a preference for couples who are married or have a child. Especially, couples where both husband and wife earn their income, they pay the lowest taxes when compared to unmarried people and the ones cohabiting with one income. On the other hand, cohabiting couples with two incomes also get advantages on their taxes.

For example, if the income is €20000 per annum, a single person will pay taxes up to 13%, i.e. approximately €2500 in taxes. In case of a married couple where one of them is an earner, they will pay 6% of their income as taxes (€1200) while a married couple with both of them earning will not pay any taxes. This means that they can save up to 13% of their income every year.

Having a child? Pay even lesser tax

The news is even sweeter for married couples with a child. Be it with one or two incomes, their taxable income will be NIL. For a cohabiting couple with one income and a child, an annual earning of €20000 will still make them pay taxes of up to 13%. But if they were to be married, they can save the 13% of taxes (~€2500 every year). A single person with one child earning €20000 a year will have to pay 6% of their income as taxes.

Therefore, if a single person or a cohabiting couple with a single income have a child, they can reduce the amount paid through taxes every year.

Choose their assessment type

Married couples can choose from one of the three types of tax assessments: joint, separate, and single that will help to reduce the overall tax paid for the year.

With joint assessment, the couple is eligible for transfer of their unused tax credits among each other. Separate assessment is very similar to joint assessment, except that the tax allowances will be equally split between the husband and wife. A joint and separate assessment is beneficial for couples where they have two incomes and one spouse has earned more than the other. In a single assessment, the husband and wife will be treated as two single persons for tax purposes (in case of divorce or forced separations).

Tax Concessions

The tax system also provides various tax concessions for married couples where –

  • There will be no Capital Gains Tax (CGT) when assets are transferred between the husband and the wife
  • No stamp duty when transferring the assets between the couple
  • No Capital Acquisition Tax (CAT) when any gifts of gratitude is shared between the couple

Self-employed?

If you run your own business and you are married, you can ensure tax savings of €5000 every year on your income. For this, your spouse should be a part of your business and have an income of €25000 that can be shown as a part of your business to avail the tax benefit.

To understand how you and your spouse can save on taxes, speak to our expert consultants today. Your first consultation is on us! Contact us here

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