Taking maternity leave often results in a tax refund. When you're on maternity leave, your income typically drops, but you may have overpaid tax earlier in the year when working full-time. This guide explains how tax refunds work during and after maternity leave in Ireland.
MyTaxRebate.ie helps parents on maternity leave claim back any overpaid tax. We review your complete tax year to ensure your credits are correctly applied and you get back what you're owed.
How Maternity Benefit Is Taxed
Maternity Benefit from the Department of Social Protection is taxable income. However, it's not subject to PRSI or USC. Here's how it works:
- •Maternity Benefit is taxed at your marginal rate (20% or 40%)
- •Your employer doesn't deduct tax from it
- •Revenue adjusts your tax credits to collect the tax due
Why You Might Be Owed a Refund
Several factors can result in a tax refund during or after maternity leave:
Lower Total Annual Income
If you earn less overall for the year due to maternity leave, you may have unused tax credits or rate band that can be converted to a refund.
Overpayment Before Leave
The PAYE system spreads your tax credits evenly throughout the year. If you paid tax based on a full year's income but then took unpaid or reduced-pay leave, you may have overpaid.
Unclaimed Tax Credits
New parents may qualify for additional credits like the Single Parent Child Carer Credit (€1,900) or Home Carer's Tax Credit (€1,950).
Example Refund Scenario
Sarah's Situation:
Normal annual salary: €45,000
Worked January-June, maternity leave July-December
Actual income: €22,500 salary + €6,500 Maternity Benefit = €29,000
Result: Sarah has unused tax credits and rate band, resulting in a refund
Other Reliefs for New Parents
Don't forget to claim:
- ✓Medical expenses from pregnancy and birth
- ✓Rent Tax Credit if you're renting
- ✓Working from home relief if you worked remotely before leave
When to Claim Your Refund
You can claim a refund:
- •During the year: If you're certain your income won't increase
- •After year end: Once the full year is complete, your exact entitlement can be calculated
Frequently Asked Questions
Will I owe tax on Maternity Benefit?
Maternity Benefit is taxable, but Revenue typically adjusts your tax credits to collect the tax due. If your overall income for the year is low enough, you may not owe additional tax and might even be due a refund.
What about employer top-ups?
If your employer tops up your Maternity Benefit, these payments are taxed like normal salary through PAYE. Your total income (Maternity Benefit + top-up) determines your tax position.
Can I claim from previous years?
Yes. If you were on maternity leave in previous years and didn't review your tax, you may be owed refunds going back 4 years. MyTaxRebate.ie checks all available years.
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