Taxes Consolidation Act 1997 section 126

Tax treatment of certain benefits payable under Social Welfare Acts

Section 126 sets out the income tax treatment of social welfare payments, specifying which payments are taxable under Schedule E, which are subject to partial exemptions, and which are fully exempt from income tax.

• Certain social welfare pensions (bereaved partner's contributory pension, orphan's contributory allowance, retirement pension, old age contributory pension, and bereaved partner's non-contributory pension) are taxable under Schedule E and subject to PAYE, as are maternity benefit, adoptive benefit, health and safety benefit, paternity benefit, and parent's benefit from 1 July 2013 onwards.
• Illness benefit, jobseeker's benefit, pandemic unemployment payment, injury benefit, and pay-related benefit are taxable under Schedule E, but the first €13 per income tax week of jobseeker's benefit is exempt, child dependant amounts are excluded from the charge, and jobseeker's benefit paid to persons in short-time employment is fully exempt.
• Any increase in a State pension paid in respect of a qualified adult is treated as the income of the pensioner (not the qualified adult), meaning the qualified adult is not entitled to the PAYE employee tax credit or increased rate band in respect of such increase from 2014 onwards.
• A wide range of social welfare payments listed in the Table to the section — including disability allowance, jobseeker's allowance, working family payment, farm assist, and supplementary welfare allowance — are fully exempt from income tax for all years of assessment.