## What it is
The Earned Income Credit (EIC) is a tax credit available to self employed people, proprietary directors (more than 15 percent shareholding), and certain other non PAYE earners. It reduces the income tax bill by up to €2,000 in 2026.
## Eligibility
You qualify if you have:
- Self employment trading or professional income
- Director's fees from a company in which you hold more than 15 percent of the shares
- Farming profits
The credit is restricted if your earned income is low. The credit is the lesser of €2,000 or 20 percent of qualifying earned income.
## Worked example, full credit
Saoirse is a self employed graphic designer with profit of €40,000.
- Income tax at 20 percent on €40,000 = €8,000
- Less Personal Tax Credit = €2,000
- Less Earned Income Credit = €2,000
- Annual income tax = €4,000
## Worked example, restricted credit
Tomas has self employed profit of €5,000 (low first year).
- 20 percent of €5,000 = €1,000
- Earned Income Credit limited to €1,000
## Interaction with PAYE Credit
If you have both PAYE and self employed income, the combined credit cannot exceed €2,000. Revenue applies the credit to whichever income source first uses it during the year. You cannot claim €2,000 PAYE credit plus €2,000 EIC.
### Worked example, mixed income
Ciara earns €30,000 employment and €15,000 self employed.
- PAYE Credit: €2,000 (full)
- Earned Income Credit: €0 (already at €2,000 cap from PAYE)
## Director scenario
Conor owns 60 percent of his own company and pays himself a director's salary of €60,000 through PAYE.
Because his shareholding exceeds 50 percent, he is not entitled to the Employee PAYE Credit on that salary. He claims the Earned Income Credit instead.
- Salary €60,000 taxed through PAYE
- Employee PAYE Credit: not available
- Earned Income Credit: €2,000
## How to claim
Self employed taxpayers claim the EIC on the Form 11 income tax return, lodged by 31 October following year end.
## Carry back or forward
The EIC cannot be carried back or forward. Unused credit in a year is lost.
## Educational notice
This article is general information. Always seek qualified tax advice for self employment and director taxation matters.