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Taxation of DSP payments

  1. Overview
  2. Taxable DSP payments you need to declare
  3. How DSP payments are taxed
  4. Taxation of illness, occupational injury and partial capacity benefits
  5. Taxation of maternity, adoptive, and health and safety benefits
  6. Taxation of Pandemic Unemployment Payment (PUP)
  7. Taxable payments you do not need to declare
  8. Tax-exempt DSP benefits

Taxation of illness, occupational injury and partial capacity benefits

Illness Benefit (IB), Occupational Injury Benefit and Partial Capacity Benefit are paid by the Department of Social Protection (DSP). These benefits are liable to Income Tax. They are not liable to Universal Social Charge (USC) or Pay Related Social Insurance (PRSI).

You might get child dependant increases (additional payments made to claimants for qualifying children). These are exempt from Income Tax, USC and PRSI.

In this page, all further references to IB can be taken to also mean Occupational Injury Benefit and Partial Capacity Benefit. The taxation of the benefits is similar.

How IB is taxed

Since 1 January 2019:

  • The DSP tells Revenue the amount of your taxable IB.
  • Any tax due from your IB is collected by reducing your tax credits and rate band. This will be shown on your Tax Credit Certificate (TCC).
  • Revenue will make an amended Revenue Payroll Notification (RPN) available to your employer so they can collect any tax due.

While you are on sick leave, if your employer:

  • pays you - you must tell them the weekly amount of your IB
  • does not pay you - you do not need to tell them the weekly amount of your IB.

In both circumstances your employer will use the latest RPN issued to them by Revenue.

Next: Taxation of maternity, adoptive, and health and safety benefits

Published: 12 February 2024 Print this page

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