Dáil Éireann Debate, Wednesday - 6 May 2026
230. Deputy Paul Lawless asked the Tánaiste and Minister for Finance when the age tax credit was last increased; its value at the time of introduction; whether it has been adjusted since 2011; and if he will make a statement on the matter. [32852/26]
Amharc ar fhreagra231. Deputy Paul Lawless asked the Tánaiste and Minister for Finance the rationale for maintaining the age tax credit at its current level for over a decade despite sustained inflation and rising living costs; and if he will make a statement on the matter. [32853/26]
Amharc ar fhreagraI propose to take Questions Nos. 230 and 231 together.
The income tax age credit was originally introduced as an income tax age allowance in 1974 and was set at a value of £25 for single or widowed persons and £50 for married couples. As part of a major income tax reform, tax credits replaced most income tax allowances in 2002.
The age tax credit was last increased in Budget 2008 from €275 to €325 for single persons and from €550 to €650 for married couples or civil partnership. As part of the suite of measures to deliver fiscal consolidation in Budget 2011, the age tax credit was amended to €245 for single persons to €490 for married couples or civil partnerships, and it has remained at these values since then.
The current tax arrangements for persons aged 65 or older compare favourably with the tax treatment of the generality of taxpayers. The age tax credit or the age exemption limits and marginal relief are available to persons aged 65 or over. In addition, 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.
As the Deputy may be aware, to ease the burden facing average and middle-income earners, over successive Budgets the previous Government substantially increased the entry point to the higher rate of income tax for all earners by €8,700 or c. 25 per cent. The main tax credits have also been increased by €350, or c. 21 per cent. In relation to USC the 2 per cent USC rate band was increased by €6,898, or 34 per cent, from 2020 to 2025. Budgets 2024 and 2025 also cumulatively reduced the 4.5 per cent rate of USC to 3 per cent.
Broadly, the income tax measures implemented over the period of the last Government are expected to be in line with wage growth.
In addition, in Budget 2026 the ceiling of the second USC rate band was further increased by €1,318, from €27,382 to €28,700 per annum.
Therefore, the substantial income tax and USC measures introduced by the previous Government, has helped to ease the burden for all taxpayers with an income tax or USC liability. 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 now €21,225 per annum and for married couple is €42,250 per annum.
Finally, as the Deputy will appreciate, decisions regarding tax incentives and reliefs are normally made in the context of the annual Budget and Finance Bill process. Such decisions must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines.
