Income Tax Exemption for over 65s

Total Tax Exemption

There is complete exemption from income tax for individuals aged 65 or over with a low income.  From 2013 onwards the income threshold has been reduced to €36,000.

The income threshold for a single person aged 65 or over for the tax year 2017 is €18,000. For a married couple once either spouse is aged 65 or over the threshold is €36,000. If you are married and have dependant children the income threshold increases for each child. For each of the first two children the threshold increases by €575. For each subsequent child the threshold increases by €830.

Marginal Tax Relief Exemption

Where a person’s income is marginally over the exemption threshold the excess income over the threshold is taxed at a fixed rate of 40%. Two calculations are in fact necessary when this applies. No marginal tax relief is allowed if your income exceeds double the exemption threshold.

The first using the marginal relief calculates the tax on the excess income over the relevant threshold at 40%.

The second is calculating your tax in the normal way and claiming all relevant tax credits.

You then use the calculation, which gives the lower tax liability. Our tax calculator automatically does this for you and uses the most favourable option for your own personal circumstances.

2013

2014

2015

2016

2017

Single/Widowed 65 years of age or over

€18,000

€18,000

 €18,000

€18,000

€18,000

Married 65 years of age or over

€36,000

€36,000

€36,000

€36,000

€36,000

Additional limit for Dependent Children

1st and 2nd child (each)

€575

€575

€575

€575

€575

Each Subsequent Child

€830

€830

€830

€830

€830

Marginal Relief Tax Rate

41%

41%

40%

40%

40%

This particular exemption causes a lot of confusion for people. Your income must be below the above exemption limits to be tax exempt. If your income exceeds the exemption limit then you will be liable for tax. However where it is marginally over the threshold your tax liability will not be significant.