Expanding on Conan's example above, let's say you have €50,000 earned income and €50,000 rental income (after allowable expenses). Without a pension contribution, you'll pay Income Tax and levies on the €100,000. If you make a pension contribution you will get full tax relief on the pension contribution. As has been said several times above, the pension contribution can only be made against the earned income. Given that you'll get tax relief in full on the pension contribution within allowable limits, in this example it doesn't matter too much whether the tax relief is against your earned or rental income. The end result is that you pay less tax if you make a pension contribution.