Exemption from tax on pension income

Since year of assessment 2023, the Government has gradually been exempting from tax, pension income derived by an individual on or after 1st January 2022 as per below so that by year of assessment 2027, all pension income will be exempt from tax.  By means of Legal Notice 5 of 2024, the capping for years of […]

Written By Stephen Balzan

On January 26, 2024
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Since year of assessment 2023, the Government has gradually been exempting from tax, pension income derived by an individual on or after 1st January 2022 as per below so that by year of assessment 2027, all pension income will be exempt from tax.  By means of Legal Notice 5 of 2024, the capping for years of assessment 2025 onwards has been increased as per below table.

Year of assessment                         Exempt amount
 
2023                                                   20% capped up to €2,864
2024                                                   40% capped up to €5,987
2025                                                   60% capped up to €9,732 (increased from €8,981)
2026                                                   80% capped up to €12,976 (increased from €11,974)
2027 and subsequent years         100% capped up to €16,220 (increased from €14,968)

This follows what has been announced in the budget speech for the year 2022 that pension income received by an individual who is at least 61 years of age will be partially exempt, gradually rising to full exemption by the year 2026.  The exempt portion shall be omitted from the individual’s tax calculation.

If you need any help or assistance with the above-mentioned, please do not hesitate to contact us on [email protected]

How can we help?  

 

For further information, please contact us on [email protected]. ACT can help you understand the changes to the income tax, accounting, corporate and VAT rules and how these can impact your business.   

 

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on +356 21378672 or send us an email on [email protected].