Dáil Éireann Debate, Wednesday - 6 May 2026
232. Deputy Paul Lawless asked the Tánaiste and Minister for Finance the year in which the former age exemption limits for taxpayers aged 65 and over were removed from the income tax system; the rationale for their removal at that time; whether any assessment was carried out on the impact of abolishing these exemption limits on older taxpayers; and if he will make a statement on the matter. [32854/26]
Amharc ar fhreagra234. Deputy Paul Lawless asked the Tánaiste and Minister for Finance the estimated fiscal cost of restoring the former age exemption limits to their pre-2011 levels, adjusted for inflation; and if he will make a statement on the matter. [32856/26]
Amharc ar fhreagraI propose to take Questions Nos. 232 and 234 together.
The income tax age exemption limits for taxpayers aged 65 and over are still available and are provided for in section 188 of the Taxes Consolidation Act 1997 (TCA 1997).
The age exemption applies for any year of assessment where an individual is aged 65 years or over and his or her total income does not exceed €18,000 per annum. Where an individual is a married person or civil partner and is jointly assessed to tax, the age exemption will apply where either individual is aged 65 or over and where the couple’s total income does not exceed €36,000 per annum. 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 per cent on all income above the exemption limit to a ceiling of twice the exemption limit. The system of marginal relief ensures that in cases where an individual's or couple’s income rises above the exemption threshold that their net income will not decline, as the 40 per cent income tax rate only applies to the proportion of income above the threshold.
The age exemption thresholds have not been increased in recent years, having last been adjusted in Budget 2011.
However, persons aged over 65 can avail of the age exemption or the normal tax system of credits and bands.
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.
Therefore, depending on their personal circumstances, it may be more beneficial for persons aged over 65 to be taxed under the normal tax system of credits and bands.
I would encourage all taxpayers to ensure that they are availing of the most beneficial tax treatment.
I am advised by Revenue that based on the information available for analysis it is not possible to provide an estimate of the fiscal cost of restoring the age exemption limits to their pre-2011 levels, adjusted for inflation. An exercise in modelling adjustments to the age exemption limits has not been carried out and the associated methodology has not been developed that would enable it to provide the information requested.
