Last Updated: March 2023
A Exempt
Pension income
As established in the Budget for 2022, pension income
received by an individual who is at least 61 years of age is partially
exempt, gradually rising to full exemption by 2026. The exempt portion is
as shown in the table below and should be omitted from the individual’s tax
calculation:
Basis Year |
|
|
|
2022: |
20% of the pension income but capped at 2864 |
|
|
2023: |
40% of the pension income but capped at 5987 |
|
|
B Tax Rebate
on Pensions
1. As established in the Budget for 2017, individuals
who are at least 61 years of age are allowed a tax rebate on their pension
income. The proper tax due should be calculated as shown hereunder.
2. All income (excluding exempt pension income
as per Section A above) is first to be charged to tax at the normal tax
rates applicable to the individual concerned: single rates, parent rates or
married rates.
The rebate is calculated as follows:
(i) Person on single rates: |
Tax rebate = (taxable pension income less 9,100) X
15% |
(ii) Person on parent rates: |
Tax rebate = (taxable pension income less 10,500) X
15% |
(iii) (a) Person on married rates: |
Tax rebate = (taxable pension income less 12,700) X
15% |
(iii) (b) Person on married rates: |
Further tax rebate = (all taxable income
less 12,700) X 15%, less rebate as per (iii)(a) |
These rebates are subject to the following cappings:
Basis Year |
2017 |
2018 |
2019 |
2020 |
2021 |
2022 2023 |
(i)
Person on single rates |
210 |
615 |
650 |
705 |
744 |
783 880 |
(ii)
Person on parent rates |
150 |
405 |
440 |
495 |
534 |
573 670 |
(iii) (a)
married rates |
45 |
75 |
110 |
165 |
204 |
243 340 |
(iii) (a)
married rates (further rebate) |
75 |
150 |
150 |
300 |
540 |
540 540 |
3. The tax due by the pensioner is therefore the
tax calculated using the normal rates, less the rebate/rebates calculated
as shown above.
4. The pension thresholds were the
following:
|
2017 |
2018 |
2019 |
2020 |
2021 |
2022 2023 |
pensions income rebated |
varied |
13200 |
13434 |
13798 |
14058 |
14318 14968 |
further income rebated |
500 |
1000 |
1000 |
2000 |
3600 |
3600 3600 |
Further information:
Tax
Rebate on Pensions Examples
Pension
Income from Department of Social Security
Overseas
Pensions |