How much do people aged 66 or over pay in income tax?

Status
Not open for further replies.
Just to add here that a single-income family (non self-employed) with at least 1 child can earn €28,800 without paying any PAYE

€28,800 x 20% = €5,760 less tax credits €5,760* = NIL

* married tax credit = €3,300
paye tax credit = €1,650
home carers credit = €810

while a dual income family could potentially earn €33,300 without paying any PAYE
 
Hi, don't understand why total is taxed at 20%.


Is the following correct?

Income 65yr old Single, on 45,000k pension.

32,800@20%=6560
12,200@41%=5002
Total =11562
minus Tax Cr=3545*
Tax payable=8017

*single tax cr 1650
paye cr 1650
age cr 245
Total 3545

There is a big disparity between tax payable by single v married.
 
110quests said:
Hi, don't understand why total is taxed at 20%.


Is the following correct?

Income 65yr old Single, on 45,000k pension.

32,800@20%=6560
12,200@41%=5002
Total =11562
minus Tax Cr=3545*
Tax payable=8017

*single tax cr 1650
paye cr 1650
age cr 245
Total 3545

There is a big disparity between tax payable by single v married.
Click to expand...

The reason that it is all taxed at 20% is because everyone can earn €32,800 (can be increased to €41,800 in certain circumstances) per annum without hitting the 41% tax bracket. In the example given it is for 2 people with separate incomes, one at €22K and one with €23K. As neither earns more than the €32,800 figure the entire sum is taxed at 41%

Your figures for a single person are correct
 
DB74 said:
The reason that it is all taxed at 20% is because everyone can earn €32,800 (can be increased to €41,800 in certain circumstances) per annum without hitting the 41% tax bracket.
Click to expand...

Not true - if your only source of income is interest from cash deposits or income from investments in funds rather than shares, then the income is taxed at 41%
 
Thank you DB74 for clarification.

From the examples ie married/single on 45000k pension age 65 the tax payable is a difference of approx 6000k p a..... 500pm.

Would it be correct to assume that 'singles' contribute the majority of total income tax take? Or numerically speaking do married persons greatly outweigh singles in the workforce ? Or are singles, probably being younger, at the lower income scales thus paying less tax?

This is not to be construed as an attempt to set singles in a war of numbers with married couples !
 
jpd said:
Not true - if your only source of income is interest from cash deposits or income from investments in funds rather than shares, then the income is taxed at 41%
Click to expand...

Well I was trying to keep it simple rather than list all types of income and the tax rates that apply.

Nonetheless just to keep the pedantry going, income from interest or investments is classed as "unearned" income while I was referring to earned income only!
 
Bronte said:
I seem to recall that interest rates with Irish Life hit a high of about 17% around 1982.
Click to expand...
The figures for mortgage rates are taken from Money Guide Ireland at http://www.*****************.com/history-of-mortgage-rates-in-ireland.html

henry said:
Re: The Misery Index, should USC be included for the latter few years.
Click to expand...
Yes,[FONT=Times New Roman, Times New Roman, serif] and we should also add in the temporary income levy in 1993; the employment and training levy from 1997 to 1999; the income levy from 2009 and the health levy from 1979. Income levies introduce another level of misery but were also paid by those now retired and levies do not alter the relatively better off taxation and economic positions of the current cohort of working tax payers vis-a-vis retirees.[/FONT]

[FONT=Times New Roman, Times New Roman, serif]The problem with BB's analysis in post # 1 is that it calculates 'effective' income tax rates and this has given the erroneous impression that those 65 and over actually pay income tax at these rates, e.g. post no 5 by 'Protocol',.[/FONT]
Protocol said:
My parents earn approx 900pw and pay 5-8% income tax/USC.
This is an unbelievably low income tax rate.
Click to expand...
[FONT=Times New Roman, Times New Roman, serif]and a rather smug headline in last weeks' Sunday Times that 'Golden oldies' are 'thriving'. But, nobody pays tax at effective tax rates and you will get as many effective tax rates as there are taxpayers, due to differing levies, thresholds, exemptions, etc. [/FONT]


[FONT=Times New Roman, Times New Roman, serif]If you want to know how much tax is paid by those aged 66 and over the answer is :[/FONT]
Those 66 and over pay the same income tax as all other taxpayers (i.e. marginal rates of 20% or 41%) . This applies after (a) an exemption limit of EUR 18,000 and (b) an Age Tax credit of EUR 245. There is also (a) a USC benefit for those aged 70 years or over who are not self-assessed, and whose aggregate income [FONT=Times New Roman, Times New Roman, serif]exclusive[/FONT] of social welfare payments is EUR 60,000 or less, who pay a maximum USC of 4% of [FONT=Times New Roman, Times New Roman, serif]all[/FONT][FONT=Times New Roman, Times New Roman, serif] income over EUR 10,036, except where any non-PAYE income exceeds EUR 100,00 in which case a 7% rate applies on the excess amount; and (b) those aged 66 or over do not pay PRSI on occupational pensions.[/FONT]
[FONT=Times New Roman, Times New Roman, serif]That's the factual position. Over 66s pay the same tax rates as all other tax payers, after certain limits and benefits.[/FONT]
[FONT=Times New Roman, Times New Roman, serif]
[/FONT]
[FONT=Times New Roman, Times New Roman, serif] But nobody starts work at age 66 and you cannot directly compare the tax situation of over 66s with that of someone currently working. To get these age-related benefits the current cohort of over 66s have worked in tougher economic times and have had to pay income taxes at higher rates than the current cohort of taxpayers, and they have done this over a long period of time.[/FONT]
 
Those 66 and over pay the same income tax as all other taxpayers (i.e. marginal rates of 20% or 41%) . This applies after (a) an exemption limit of EUR 18,000 and
Click to expand...

This makes it sound as though only income above €18,000 will be taxed. To clarify: this exemption applies to the single taxpayer of 65 or over whose total income does not reach €18,000.
It does not benefit pensioners on large incomes.
 
PMU;
Excellent post .

I hope this notion that Pensioners are coining it on the back of todays workers has been killed off by the posts in aam.
Pensioners by definition have earned their pension and as your historical figures clearly show, todays pensioners contributed dearly at other (poor) times.

I suppose every generation gets a hit in their working lives . This generation is taking their hit today.
This poor time will pass.
 
Gerry Canning said:
PMU;
Excellent post .

I hope this notion that Pensioners are coining it on the back of todays workers has been killed off by the posts in aam.
Pensioners by definition have earned their pension and as your historical figures clearly show, todays pensioners contributed dearly at other (poor) times.

I suppose every generation gets a hit in their working lives . This generation is taking their hit today.
This poor time will pass.
Click to expand...

I hope you are correct and I get to reap the rewards in 21 years time! Hoping the contributory pension is still there and my defined benefit pension is still intact!
 
Status
Not open for further replies.
Back
Top