Richard Bruton
Ceist:420. Deputy Richard Bruton asked the Minister for Finance the current status of the age exemption limit in the income tax code; and if he will make a statement on the matter. [44204/22]
Amharc ar fhreagraThursday, 8 September 2022
Ceisteanna (420)
Freagraí scríofa
The tax code provides for a number of tax credits and reliefs for those aged 65 and over.
The current age exemptions limits mean that single, widowed or surviving civil partners aged 65 or older do not pay any income tax if they earn less than €18,000 per annum with a threshold of €36,000 in place for a married couple or civil partners where one person is 65 years of age or older. The relevant income thresholds may be increased further if the individual has a qualifying child. The thresholds are increased by €575 in respect of both the first and second child, and €830 in respect of each subsequent child.
Marginal relief may be available where the individual’s or couple’s income exceeds the relevant exemption limit but is less than twice that amount. Where marginal relief applies, the individual or couple is taxed at 40% on all income above the exemption limit to a ceiling of twice the exemption limit. Once the income exceeds twice the exemption limit marginal relief is no longer available and the individual pays tax under the normal tax system. It should be noted, however, that where the individual’s income is greater than the exemption limit but below twice that limit, the taxpayer is always given the benefit of the more favourable treatment as between the use of marginal relief or the normal tax system of credits and bands.
Persons aged 65 or over may also avail of the age tax credit, which currently amounts to €245 per year for single persons or €490 per year for married couples or civil partners. Reduced rates of USC also apply for persons aged 70 or older where their total income is €60,000 or less.
As such, the current tax arrangements for persons aged 65 or older compare favourably with the tax treatment of the generality of taxpayers.
Additional guidance on the range of tax credits and reliefs that may be available for individuals over 65 years of age can be found in Tax and Duty Manual Part 15-01-26, which can be located at the following link – Tax and Duty Manual: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-26.pdf.
The general position is that all tax expenditures and reliefs, including the age exemption limit, fall to be considered as part of the annual Budget and Finance Bill process. However, it is a longstanding practice of the Minister for Finance not to comment in advance of the Budget on any tax matters that might be the subject of Budget decisions.