Take someone aged 35 earning 70,000 euro who pays income tax at the 40% marginal rate. At age 35 the age related limit is 25% of earnings, and the 70,000 salary is below the 115,000 earnings cap, so the maximum relievable contribution is 25% of 70,000, or 17,500 euro. Relief is given at the marginal rate, so 40% of 17,500 comes back as 7,000 euro of income tax saved. The net cost of putting 17,500 into the pension is therefore only 10,500 euro out of pocket. A 20% taxpayer making the same contribution would instead get 3,500 euro of relief, leaving a net cost of 14,000 euro.
How it is calculated
Pension tax relief in Ireland has two limits working together. First, the amount you can contribute with relief is capped at an age related percentage of earnings, rising from 15% under 30 to 40% at age 60 and over. Second, the earnings used in that calculation are capped at 115,000 euro, so a very high earner cannot relieve a percentage of their full salary. The maximum relievable contribution is the age percentage applied to the lower of your earnings and that cap. Relief is then given at your marginal income tax rate, meaning a 40% taxpayer effectively pays only 60 cents in the euro for each euro contributed. USC and PRSI relief generally do not apply to personal contributions, so the saving shown here is income tax only.
Frequently asked questions
How much pension relief can I claim?
You get income tax relief on pension contributions up to an age-related percentage of earnings: 15% under 30, rising to 40% at 60 and over. Earnings are capped at 115,000 euro for this purpose. Relief is at your marginal income tax rate, so a 40% taxpayer gets 40 cents back per euro contributed. USC and PRSI relief generally do not apply.
What are the age-related contribution limits set by Revenue?
Revenue sets limits by age band. Under 30: 15% of net relevant earnings. Age 30-39: 20%. Age 40-49: 25%. Age 50-54: 30%. Age 55-59: 35%. Age 60 and over: 40%. These percentages apply to the lower of your actual earnings and the 115,000 euro earnings cap, so the absolute maximum relievable contribution in 2025 and 2026 is 46,000 euro (40% of 115,000).
Does my employer contribution count toward my limit?
No. The age-related percentage limit applies to personal contributions only. Employer contributions to an occupational pension scheme are not counted against your personal annual limit and attract their own separate relief rules for the employer. You can therefore receive employer contributions on top of your own tax-relieved personal contributions, up to the overall Revenue maximum fund limit of 2 million euro over a lifetime.
Can I carry forward unused pension relief to future years?
Revenue does not allow unused annual relief to be carried forward to future tax years. Each tax year stands on its own. However, you can make a pension contribution in the period from 1 January to 31 October and elect to have it treated as a contribution for the previous tax year, provided you make the election before the filing deadline for that year. This is a common year-end tax-planning step for people who under-contributed during the year.