Is Maternity Benefit Taxable in Ireland? (Rates, Taxation Rules)

Ireland’s Maternity Benefit is a taxable payment to women on maternity leave for pregnancy and infant care. 

The standard Maternity Benefit rate is €274 per week in 2024 and is paid for 26 weeks.

Let’s explore how the payment is taxed and some related FAQs. 

Is Ireland’s Maternity Benefit Taxable?

Much like other Irish Employee Benefits, Maternity Benefit is subject to Income Tax. 

The Irish Revenue Department reduces the personal tax credits and rate band of an employee on maternity leave benefits to cover the taxation of Maternity Benefit.

What are personal tax credits and rate bands?

• Tax credits are given to people who pay Income Tax and can be used to reduce the tax they have to pay. 

• The rate band refers to the tax charged on your income level. As of February 2024, rate bands stand at 20% and 40%. 

• The 20% tax rate applies to the first part of your income — up to a specific amount: 

  • Single person -  €42,000 annually.

  • One parent family - €46,000 annually.

  • Married couples/civil partners with one income - €51,000 annually.

  • Married couples/civil partners with two incomes - up to €84,000 annually.

Please note that the amounts mentioned above are 2024 figures.

How is Maternity Benefit Taxed?

The tax rate is 20% for the weekly Maternity Benefit payment. 

In other words, if you receive the full Maternity Benefit payment in 2024, you will have a tax due of €54.80 (€274 x 20%) every week. 

Revenue will take this amount, and they will deduct it from your tax credits and rate band.

The catch?

The adjusted tax credit certificate and rate band apply for the duration of the Maternity Benefit only. When the employee returns to work, the tax credit certificate is readjusted.

Different taxation methods are applied based on the allowance type received by employees:

• Full wage received while Maternity Benefit is paid to the employer: You may be entitled to a tax and PRSI refund in the form of weekly tax credits. That means only the difference between the full wage paid by employers and Maternity Benefit payment to the employer is considered for Income Tax, PRSI and USC.

• 'Top-up' weekly earnings received along with Maternity Benefit: Only the earnings received from the employer are subject to PRSI, USC, and Income Tax.

• No wages paid, only Maternity Benefit received: You can request that your employer provide a revised Revenue Payroll Notification (RPN). You may also qualify for a tax refund, and you must contact your Revenue office for more information.

Feeling confused with all that information?

Here’s an example: 

• Suppose you earn a weekly wage of €700. 

• Your annual tax credits are  €3,750 (or €72.11 weekly).  

• Your annual rate band is €42,000 taxed at 20% (or €807.69 taxed at 20% weekly), with the balance taxed at 40%.

You start your maternity leave on 1 February 2024 and qualify for a Maternity Benefit payment of €274 per week, paid to your employer. 

Your employer pays the weekly wage of €700 while you’re on maternity leave. This is an example of a “top-up” wage payment.

• Your annualised Maternity Benefit is €274 x 52 weeks = €14,248. This must be deducted from your rate band.

• So your rate band is €42,000 (original rate band) - €14,248 (annual Maternity Benefit) = €27,752.

• Your tax credits must also be adjusted to account for the 20% tax on Maternity Benefit — 20% of €14,248 = €2,849.60.

• This is reduced from the annual tax credit amount of €3750. So your revised annual tax credits are €3,750 (original tax credits) - €2,849.60 (tax on Maternity Benefit) = €900.40.

• Your weekly tax credit is €900.40 / 52 weeks = €17.31.

• Your weekly wage breakdown during maternity leave:

  • Maternity Benefit: €274 (already tax-adjusted)

  • Employer's top-up: €700 - €274 = €426

• The Maternity Benefit amount has already been tax-adjusted. However, you’ll still have to pay PRSI, USC and Income Tax on the €426.

• Tax on employer's top-up:

  • Gross tax: 20% of €426 = €85.20

  • Net tax: €85.20 - €17.31 (weekly tax credit) = €67.89

• Total tax, PRSI, and USC on the €438:

  • Income Tax: €71.73 (as calculated above)

  • PRSI and USC: These will be calculated based on the specific rates applicable to your income bracket.

• Once you return to work after maternity leave, your annual tax credits and rate band will revert to €3,550 and €40,000, respectively.

  This is a simplified example. Actual tax calculations can be more complex and may depend on other factors such as total annual income, specific PRSI and USC rates, and any other income or deductions you might have.

  Maternity Benefit Claims Spanning Two Years

When an employee is on maternity leave across two tax years, the Maternity Benefit paid in the second year is taxed by reducing tax credits and the rate band on a cumulative basis. 

This means the tax due for the second year is spread over the entire year. 

Couples Taxed Under Joint Assessment

Where the mother does not have enough tax credits and rate band to cover the taxation of the Maternity Benefit payments, Revenue will collect the remainder from the spouse or civil partner. 

4 FAQs About Maternity Benefit in Ireland

Here are the answers to some commonly asked questions on Maternity Benefit:

1. How Much Is the Maternity Benefit Payment?

The standard rate of Maternity Benefit is €274 each week in 2024. 

You’ll receive a half-rate Maternity Benefit (€137/week) if you qualify for Maternity Benefit and certain social welfare payments like the One-Parent Family Payment.

2. How Long Is Maternity Leave?  

Expectant mothers can take 26 weeks of maternity leave and receive Maternity Benefit for the entire term. They can also take a further 16 weeks of unpaid maternity leave if required. 

3. Who Qualifies for Maternity Benefit?

Maternity Benefit is paid to women who:

• Are employed, recently employed, or self-employed.

• Take time off for maternity leave.

• Meet the relevant conditions for PRSI contributions. PRSI (Pay Related Social Insurance) is a payment made by employers and employees.  

Here’s more information on Maternity Benefit Eligibility. 

4. What Other Family Benefits Do Irish Citizens Receive?

The Irish Department of Social Protection (DSP) provides family income supplements and social welfare payments like Maternity Benefit, Adoptive Benefit, and Child Benefit. 

Easily Manage Employee Benefits With Kota 

Ireland’s Maternity Benefit offers financial support for employees on maternity leave. 

But that may not be enough for pregnant employees. They will also need health insurance coverage for consultations, vaccinations, antenatal classes, and more. 

Fortunately, employers can use Kota to provide health insurance for their employees. 

Once employers set up their contribution, employees can choose packages based on their needs, including add-ons for maternity extras.  

Join Kota to make sure your pregnant employees are cared for!