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Irish Income Tax Burden 'Higher On Young People'

by Jason Gorringe, Tax-News.com, London

02 November 2016


The range of tax breaks available to older people in Ireland result in very significant differences in tax liability between age groups, according to new research by think tank Public Policy Ireland.

Public Policy Ireland said that in 2016-17 a married employee will pay EUR4,716 (USD5,223) more in income tax (including Universal Social Charge (USC) and Pay Related Social Insurance (PRSI)) on an average income of EUR36,000 than a pensioner aged 65 or over.

Public Policy Ireland calculated that the income tax payable by a married person earning EUR36,000 in 2016-2017 would be EUR4,780, whereas that payable by a pensioner on the same income is estimated at EUR65. A married employee earning EUR50,000 would face an income tax bill of EUR10,980, and a pensioner EUR6,200 – a difference of EUR4,780.

The think tank explained that a person aged 65 or over is exempt from income tax where their total income falls below a certain threshold. The threshold is EUR18,000 for a single person and EUR36,00 for a married couple. Where their income is in excess of the relevant threshold, the tax is capped at 40 percent of the excess, provided their income is not more than twice the amount of the relevant exemption limit.

Any person who is aged 65 or over at any time during the tax year also qualifies for an age credit of EUR245 for a single person and EUR490 for a couple (only one of whom needs to be 65 or over). In addition, the state pension is exempt from USC, and individuals aged 70 years or over with an aggregate income of EUR60,000 or less qualifies for a reduced rate of USC on their entire income.

TAGS: individuals | tax | Ireland | tax thresholds | tax rates | social security | tax breaks | individual income tax

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