Cian O'Callaghan (Dublin Bay North, Social Democrats)
Link to this: Individually | In context | Oireachtas source

199. To ask the Minister for Finance the rate at which the State pension (contributory) is taxable alongside other sources of income; the method used for calculating that tax rate; and if he will make a statement on the matter. [7329/23]

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

The Department of Social Protection (DSP) State pension (contributory) is a taxable source of income, similar to other DSP payments including Jobseekers’ Benefit and Maternity Benefit. As such, it is liable to Income Tax (IT) although it is not subject to the Universal Social Charge (USC) or Pay Related Social Insurance (PRSI).

I am advised by Revenue that, where a person is in receipt of the State pension from DSP has an additional source of income such as an occupational pension, the mechanism used to tax payments from the DSP is by reducing the person’s annual tax credits and rate band by the annual amount of their DSP income. This ensures that their weekly payment from the DSP is paid gross to the recipient, while their weekly/monthly occupational pension paid by their pension provider will have any tax due on the DSP income and on the occupational pension deducted from it.

Finally, I might add that Ireland has one of the most progressive personal income tax systems in the world, whereby the rate at which an individual's income is taxed depends on that person's own individual income and personal circumstances.