A private pension and the State Pension are taxed differently, not interchangeably — the State Pension is taxable but exempt from USC and PRSI, while a private or occupational pension is taxable and USC-liable but carries no PRSI at all. This calculator combines the two correctly, and applies the age-related reliefs most other calculators miss: the €18,000/€36,000 income tax exemption and marginal relief from age 65, the Age Tax Credit, and the reduced 2% USC rate from age 70 — each spouse's own age tracked separately for a married couple, since one of you can reach these milestones well before the other.
Your private pension, State Pension and (if you're 65) Benefit Payment for 65 Year Olds are added together for Income Tax, taxed at 20%/40% by the usual bands, then reduced by Personal, Employee and (from age 65) Age Tax Credits — shown as a line-by-line breakdown so you can see exactly which credits were applied. From 65, if your combined income is at or below €18,000 (single) or €36,000 (married/civil partners, EITHER spouse 65+), Income Tax is fully exempt; between that and twice the limit, Income Tax is capped at 40% of the amount over the limit if that's lower than the standard calculation. USC applies only to the private pension — the State Pension and BP65 are excluded from USC entirely, including from the €13,000 USC exemption threshold — and from age 70, USC is capped at 2% above the first band provided your income is €60,000 or less, judged on each spouse's own age and income individually. PRSI is not charged on any of these income streams: a private pension in payment falls under PRSI Class M, and the State Pension and BP65 carry no PRSI by statute.
They're genuinely different rules. The State Pension is a taxable Department of Social Protection payment for Income Tax purposes, but social welfare payments are exempt from USC by statute — so it's added to your Income Tax calculation but left out of USC (and PRSI) entirely, including the €13,000 USC exemption check on your other income.
Correct — once a pension is in payment, it's recorded under PRSI Class M, a zero-rate class, regardless of your age. That's different from a salary or self-employment income, which stays PRSI-liable (Class A or S) until you claim your State Pension (Contributory) or turn 70, whichever comes first.
From the year you turn 65, if your total income is at or below €18,000 (single) or €36,000 (jointly assessed married/civil partners), you pay no Income Tax at all. If your income is above that but below twice the limit, marginal relief caps your Income Tax at 40% of the amount over the limit — you get whichever is lower, that or the standard calculation with your usual credits.
Each spouse's own total income — private pension plus their own State Pension and BP65 — determines their share of the combined band, the same rule this app's Single/Compare modes apply to two salaries. It isn't a flat pooled figure, so entering each spouse's income separately (rather than one combined number) gives the accurate result.
Yes, and this calculator tracks it: enter each spouse's own age separately. The age exemption, marginal relief and Age Tax Credit kick in once EITHER of you turns 65 (the couple rate doesn't double if you're both 65+ — it's a flat €490 either way), while the over-70 reduced USC rate is judged on each spouse's own age and their own private pension, since USC is charged individually even under joint assessment.
BP65 is a Department of Social Protection payment that bridges the gap between retiring at 65 and reaching State Pension age at 66, for someone who has stopped working and meets the PRSI conditions. It's taxed exactly like the State Pension: fully taxable for Income Tax, but exempt from USC and PRSI. Because it only applies in the year you're 65, this field only appears once you enter that age.
No — this mode is for pension income already in regular payment (an annuity, an occupational pension, or an ARF/PRSA you're already drawing a fixed amount from). For the statutory imputed-distribution minimum and multi-year ARF drawdown projections, use the ARF Drawdown calculator instead.
Figures are estimates for informational purposes only, based on the assumptions you enter, and are not tax advice. Consult a tax advisor or Revenue.ie before making financial decisions.