Category: Age 65 & Over

Income Tax Exemption for over 65s

March 23, 2020

Total Tax Exemption

There is a complete exemption from income tax for individuals aged 65 or over with a low income.

The income threshold for a single person aged 65 or over is €18,000. For a married couple once either spouse is aged 65 or over the threshold is €36,000. If you are married and have dependent children the income threshold increases for each child. For each of the first two children the threshold increases by €575. For each subsequent child the threshold increases by €830.

Marginal Tax Relief Exemption

Where a person’s income is marginally over the exemption threshold the excess income over the threshold is taxed at a fixed rate of 40%. Two calculations are in fact necessary when this applies. No marginal tax relief is allowed if your income exceeds double the exemption threshold.

The first using the marginal relief calculates the tax on the excess income over the relevant threshold at 40%.

The second is calculating your tax in the normal way and claiming all relevant tax credits.

You then use the calculation, which gives the lower tax liability. Our tax calculator automatically does this for you and uses the most favorable option for your own personal circumstances.

This particular exemption causes a lot of confusion for people. Your income must be below the above exemption limits to be tax exempt. If your income exceeds the exemption limit then you will be liable for tax. However where it is marginally over the threshold your tax liability will not be significant.

New USC Rates for over 70s

April 29, 2013

Reduced rates of USC apply to –

  • People aged 70 or over whose aggregate income for the year is €60,000 or less
  • Medical card holders aged under 70 whose aggregate income for the year is €60,000 or less.

Aggregate income for USC purposes does not include payments from the Department of Social Protection.

For 2016, the reduced rates are –

1% – on the first €12,012

3% – all income over €12,012.

No PRSI Charge

April 29, 2013

There is no charge for PRSI from age 66 onwards. This test is applied separately for husband and wife unlike the benefit of the age tax credit.

Age Tax Credit

April 29, 2013

You get an extra tax credit for each tax year from age 65 onwards. For a single person this is worth €245 and for a married couple €490.

It is available for married couples once either spouse is aged 65 or over.

Our tax calculators automatically give the benefit of this extra tax credit once you have entered your year of birth in the profile section.

Repayment of Deposit Interest Retention Tax (DIRT)

April 29, 2013

This is a benefit that also causes a lot of confusion.

If you are aged 65 or over or your spouse or civil partner is aged 65 or over or if you are permanently incapacitated, you may not be liable for DIRT if you are exempt from income tax.

 

It is available for married couples once either spouse is aged 65 or over.

This is a benefit that is often overlooked as if you are due back the DIRT you must claim it back from the Revenue.

However this only applies provided you are not liable for income tax on the deposit interest in the normal way.

It is possible to get clearance from the Revenue so that the bank do not have to take the DIRT directly from your bank deposit interest. Ask your bank for the required forms.

Reduced Tax Liability (Marginal Relief)

April 29, 2013

This is a follow on from on form our previous article on the age exemption limits. Where your income is slightly over the thresholds mentioned then your tax liability is calculated in two different ways.

The first method taxes the excess income over the tax free threshold at a flat rate of 40% ignoring normal tax credits and reliefs.

The second method calculates your tax liability in the normal way using your tax credits and reliefs. You pay whichever method gives the lowest tax liability.

If all of this sounds confusing do not worry our tax calculator will do all of this automatically for you once you have entered your year of birth in the profile section.

There is no marginal tax relief for individuals under 65 years of age from 2008 onwards.

No Income Tax Charge (Income Exemption)

April 29, 2013

From age 65 onwards there is no charge to Income Tax provided your income does not exceed a certain threshold. For single and widowed persons this threshold is €18,000 for the year 2016 and for a married couple it is €36,000.

It is available for married couples once either spouse is aged 65 or over. If you have dependent children the threshold is increased at a fixed rate per child for each tax year.

You are tax free only if your income does not exceed the threshold. Where your income does exceed the threshold you will be liable for income tax subject to claiming what is called marginal relief which reduces your normal tax liability.