The tax code provides for a number of tax measures for those aged 65 and over. This includes section 464 Taxes Consolidation Act 1997 which provides for the Age Tax Credit for individuals aged 65 or over. The credit is due in the year that an individual reaches the age of 65 and is granted for the full tax year. The current value of the tax credit is €245 per year for single persons or €490 per year for married couples or civil partners. The credit is available when the older spouse or civil partner reaches the age of 65.
The current tax arrangements for persons aged 65 or older compare favourably with the tax treatment of the generality of taxpayers. 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. Additionally, 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.
Persons aged over 65 can avail of the age exemption or the normal tax system of credits and bands, whichever is more beneficial.
Reduced rates of USC also apply for persons aged 70 or older where their total income is €60,000 or less per annum. Furthermore, the State Contributory Pension and the State Non-Contributory Pension are not chargeable to USC or Pay Related Social Insurance.
With the substantial increases to tax credits introduced by the previous Government, the effective entry point to income tax has increased for all taxpayers, including those aged 65 or older. For 2026, the effective entry point to income tax for an individual in receipt of the single person credit, employee/earned income credit and the age credit is €21,225 per annum.
The Commission on Taxation and Welfare recommended that age should be removed as a factor for determining the charge to income tax and USC as it narrows the base and breaches the concept of horizontal equity. Further details are set out in the Report of the Commission, at the following link - www.gov.ie/en/publication/7fbeb-report-of-the-commission/.
As the Deputy will appreciate, decisions regarding taxation measures are made in the context of the annual Budget and Finance Bill processes, at the appropriate time, and having regard to the sound management of the public finances.
