State Savings Ireland 2026: Complete Guide to Tax-Free Returns

State Savings are the only DIRT-free savings option in Ireland. For long-term savers, they often beat taxed alternatives.

State Savings Overview

Why State Savings?

1. DIRT-Free

No 41% tax on interest. You keep 100% of the stated rate.

2. Government Guaranteed

Backed by the Irish government—the safest guarantee available.

3. Competitive After Tax

State Savings 5-Year gives 46% more net return than Bunq.

4. No Limit

No maximum investment (unlike €100,000 deposit guarantee elsewhere).

Savings Certificates (5-Year)

Rate: 1.74% AER (tax-free) Tax equivalent: 2.95% Term: 5 years and 6 months

How It Works

• Minimum: €50
• Maximum: €120,000
• Interest added at end of term
• Can cash early (reduced return)

Interest Calculation

Interest is loaded toward the end:

Full 1.74% AER only achieved if held to maturity.

Early Encashment

Important: Early withdrawal means significantly lower returns.

Who Should Choose This?

• Long-term savers (5+ years)
• Those prioritising safety
• People in higher tax brackets (41% DIRT hurts more)

National Solidarity Bonds

10-Year Bond

Rate: 2.01% AER (tax-free) Tax equivalent: 3.41% Term: 10 years

The highest State Savings rate, but requires long commitment.

4-Year Bond

Rate: 1.00% AER (tax-free) Tax equivalent: 1.69% Term: 4 years

Lower rate but shorter term than Certificates.

How They Work

• Minimum: €50
• Maximum: €250,000 (4-year), €250,000 (10-year)
• Interest loaded toward end
• Can cash early (reduced return)

3-Year Savings Bond

Rate: 1.32% AER (tax-free) Tax equivalent: 2.24% Term: 3 years

Comparison with Alternatives

Raisin beats Savings Bond even after DIRT for 3-year term.

Deposit Account Plus

Rate: 0.75% (tax-free) Tax equivalent: 1.27% Term: On demand (7 days notice)

How It Works

• Minimum: €10
• Maximum: €150,000
• 7-day notice for withdrawals
• Interest paid annually

Comparison with Instant Access Accounts

Verdict: Bunq/Trade Republic beat State Savings Deposit even after DIRT.

Instalment Savings

Rate: 0.98% AER (tax-free) Tax equivalent: 1.66% Term: 6 years Monthly: €25-€1,000

How It Works

• Save monthly for minimum 12 months
• Must hold for full 6 years for full rate
• Early withdrawal: only 0.05% rate applies

Comparison with Regular Savers

AIB Regular Saver beats Instalment Savings on rate, despite DIRT.

Instalment Savings only makes sense if:

• You need government guarantee
• You're certain you'll hold 6 years
• You don't want to manage annual renewals

Prize Bonds

Expected return: ~0.35% (average) Tax equivalent: ~0.60% Term: On demand

How Prize Bonds Work

• No fixed interest rate
• Weekly/monthly draws for cash prizes
• Prizes range from €50 to €1 million
• Average expected return based on prize pool

Prize Structure

Should You Buy Prize Bonds?

Mathematically: No. Average return (~0.35%) is far below other options.

For fun: If you enjoy the lottery aspect, Prize Bonds at least don't lose money.

Better alternative: Put money in Bunq (2%), buy actual lottery tickets with the interest if you want excitement.

How to Buy State Savings

Online

1. Visit statesavings.ie
2. Create account with email and PPS number
3. Verify identity
4. Purchase product
5. Pay via bank transfer

Post Office

1. Visit any post office
2. Bring photo ID and PPS number
3. Fill in application form
4. Pay by cash, cheque, or card

Existing Holder

If you already have State Savings, you can top up:

• Online via statesavings.ie
• By post
• At post offices

Encashment (Getting Your Money Out)

Certificates and Bonds

• Apply online or at post office
• Usually processed within 2-3 business days
• Payment to your bank account

Early Encashment Warning

Cashing early means:

• Year 1: 0% return (you get principal only)
• Years 2-4: Significantly reduced rates
• Only worth it if: You absolutely need the money

State Savings vs Alternatives

For Long-Term (5+ Years)

For Medium-Term (3 Years)

For Short-Term/Instant Access

Tax Considerations

DIRT Exemption

State Savings interest is not subject to DIRT. This is the main advantage.

Declaring State Savings

Even though DIRT-free, you may need to declare State Savings income if:

• You file a tax return
• The income affects means-tested benefits

The interest isn't taxed, but Revenue can see it.

Comparison Calculation

To compare State Savings with taxed accounts:

• State Savings rate ÷ 0.59 = Equivalent taxed rate
• Example: 1.74% ÷ 0.59 = 2.95%

A taxed account needs to pay 2.95% gross to match State Savings 1.74% tax-free.

Pros and Cons

Pros

✅ DIRT-free—significant for long-term savings ✅ Government-guaranteed—safest option ✅ No maximum (unlike €100,000 deposit guarantee) ✅ Set and forget for long-term savers ✅ Available at post offices nationwide

Cons

❌ Must hold long terms for best rates (5-10 years) ❌ Early withdrawal severely penalised ❌ Lower rates than some alternatives for short terms ❌ Interest loaded at end (you wait for returns) ❌ Less flexible than instant access accounts

Best State Savings Strategy

If You Won't Need Money for 5+ Years

Choose: 5-Year Savings Certificate (1.74% tax-free)

• Best after-tax return for accessible terms
• Government guarantee
• Set and forget

If You Want Maximum Return and Can Wait 10 Years

Choose: 10-Year National Solidarity Bond (2.01% tax-free)

• Equivalent to 3.41% taxed
• Long commitment but excellent return

If You Need Flexibility

Choose: Not State Savings

• Use Bunq (2.01%) for instant access
• State Savings' flexibility products (Deposit Account) don't compete

Summary

Bottom line: State Savings 5-Year Certificates are excellent for long-term, tax-efficient savings. For flexibility, neobanks win.

Last updated: January 2026

Related Guides

• Best Savings Accounts Ireland
• DIRT Tax Explained
• Best Lump Sum Savings