Who qualifies
Self-employed traders, sole proprietors, partners in a partnership, farmers and proprietary directors who do not qualify for the PAYE credit on the same income.
How to claim
Claim it on your annual Form 11 income tax return through ROS, or on the Form 12 if you file under PAYE myAccount. Revenue grants the credit automatically once it sees self-employed income in the relevant tax year.
Detailed explanation
The Earned Income Credit was introduced in 2016 to start closing the gap between employees and the self-employed. From 2026 it is worth 2,000 euro, fully matched with the PAYE Employee Credit. It applies to earned income from a trade, profession or vocation, and to the salary of a proprietary director who owns more than 15 percent of the share capital of their company. The credit cannot be claimed twice: if you have both PAYE income and self-employed income, you receive only the higher of the two credits up to a combined cap of 2,000 euro across both heads. If both spouses are self-employed each can claim their own Earned Income Credit. The credit is non-refundable and reduces tax otherwise payable at the standard rate. Trading losses do not generate the credit because the credit applies to assessable earned income, not gross turnover. Farmers operating sole trades qualify on their net farm profit. Where a self-employed person also has rental or investment income those amounts do not boost the Earned Income Credit, since investment income is unearned. Revenue will pre-populate the credit in your draft Form 11 once your previous year accounts have been filed, but you should always tick the box confirming entitlement in the personal details section of the return.
Worked example
Niamh is a self-employed graphic designer with 50,000 euro net profit. Tax at 20 percent on 44,000 plus 40 percent on 6,000 = 8,800 plus 2,400 = 11,200 euro. Her Personal Credit (2,000) and Earned Income Credit (2,000) cut that to 7,200 euro. USC and PRSI add about 3,300 euro, so she keeps roughly 39,500 euro after tax.