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Taxation rate for pensioners above €18,000?

  • 19-02-2020 11:35am
    #1
    frustrated_
    Closed Accounts Posts: 19 ✭


    I'm wondering please what the current taxations rate for pensioners are.

    I know the first €18,000 is exempt. Is everything above this taxed at the same the same as others, i.e. 20% up to €35,300 and above that 40%?

    I have a relative who will be receiving approx 30k per year via both an occupational and social welfare pension, we would like to get a ballpark tax figure. Obviously different tax credits can and will apply but is it just a case of using an online tax calculator?

    Thank you.


Comments

  • #2
    Stratvs
    Registered Users, Registered Users 2 Posts: 958 ✭✭✭Stratvs


    Where the total income is under €18,000 the exemption limit applies so no tax. However if income is above that the normal tax credits and rate bands must be applied. So for example for a single individual with income of €30K from occupational & state pensions then it would go something like this :-

    €30,000 @ 20% = €6,000 ( under €35,300 so all at 20% )
    Less tax credits :-
    personal €1,650
    employee cr €1,650
    age cr €245
    leaves net tax of €2,455.

    USC will also apply if the occupational pension exceeds the relevant threshold. DEASP pension doesn't count towards that threshold.
    In your example if total is €30K DEASP is likely €13K-ish so €17K from occupational and on that USC would be €160 for the year.

    So give or take deductions of €2,455 + €160 for the year.


  • #3
    frustrated_
    Closed Accounts Posts: 19 ✭frustrated_


    Stratvs wrote: »
    Where the total income is under €18,000 the exemption limit applies so no tax. However if income is above that the normal tax credits and rate bands must be applied. So for example for a single individual with income of €30K from occupational & state pensions then it would go something like this :-

    €30,000 @ 20% = €6,000 ( under €35,300 so all at 20% )
    Less tax credits :-
    personal €1,650
    employee cr €1,650
    age cr €245
    leaves net tax of €2,455.

    USC will also apply if the occupational pension exceeds the relevant threshold. DEASP pension doesn't count towards that threshold.
    In your example if total is €30K DEASP is likely €13K-ish so €17K from occupational and on that USC would be €160 for the year.

    So give or take deductions of €2,455 + €160 for the year.

    Excellent thank you, that is exactly what I was looking for. You are spot on in saying that the DEASP is 13k and occupational 17k.


  • #4
    Stratvs
    Registered Users, Registered Users 2 Posts: 958 ✭✭✭Stratvs


    frustrated_ wrote: »
    Excellent thank you, that is exactly what I was looking for. You are spot on in saying that the DEASP is 13k and occupational 17k.

    No problem. Just as an aside, as there will be ongoing net tax payable, they should keep any unreimbursed medical expenses as they could be submitted for 20% refund after the year end. It's probably the only additional tax relief they may have !

    Also if not already done a registration on MyAccount would be useful to get year end employment detail summary for the occ. pension and also to submit returns for any medicals.

    Finally, make sure that the DEASP pension is coded into their tax credits once the occ. pension starts. They will eventually put it on but it's not as fast as you might think even with the new PAYE modernisation system.


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