DIRT and/or PAYE for 65+

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charlie007

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I am going to receive €20k interest from a State Savings bond next year.
I will also be over 65 from the start of the year (2025).

My question is will I then be taxed on any further income, interest or other,
as I will almost certainly have used up the exemption limit, presently €18k?

I do have some flexibility with other investments e.g. cashing in this year or
waiting until 2026 or further, but this is of course dependent on the answer
to the above.
 
Thanks for that and I understand that the bond interest is DIRT free.
However would any income liability for 2025 be then starting from €20k or zero?
 
My experience is that income tax liability always starts somewhere!!

Next year when I receive the €20k will the €18k exemption then kick in
or is it used up by the €20k?

Forgive me if I'm phrasing this badly.
 
Deposit interest is not taxed under the income tax system i.e. 20% or 40% with credits and allowances. It is taxed at 33% on any interest received.
It is not counted as part of the 18000 euro income tax exemption.
 
Thanks for that. Being over 65 next year I can 'earn' interest DIRT free.
Is this still not counted as part of the €18k exemption?
Ex. in 2025 I receive €20k interest DIRT free from a state bond. If I receive
€3k interest from an account with a form DE1 earlier in 2025, do I have a tax liability?
 
charlie007 said:
Being over 65 next year I can 'earn' interest DIRT free.
Click to expand...

Being over 65 you can earn interest DIRT free IF you qualify See here

Interest received on State Savings bonds does is fully excluded from all Income Tax calculations and from all DIRT calculations.

In your example, your €20k interest received from a State Savings Bond is free of income tax and DIRT. And the €3k interest you receive from an account for which a form DE1 is in place will not incur a tax liability.
 
charlie007 said:
Thanks for that. Being over 65 next year I can 'earn' interest DIRT free.
Is this still not counted as part of the €18k exemption?
Ex. in 2025 I receive €20k interest DIRT free from a state bond. If I receive
€3k interest from an account with a form DE1 earlier in 2025, do I have a tax liability?
Click to expand...
I think I am wrong in #7, the interest might count towards the exemption.
Do you have any earned income in addition to your expected interest income ?
If you have no earned income the 18000 exemption would be usefull to offset some of your interest income.
Don't get to hung up about the 18000 euro tax exemption.
It is largely useless to most over 65s.
It's only of benefit to an over 65 without PAYE income sufficient to make use of there full PAYE tax credits.
Because of the increases in tax credits over the last few years any single person can now earn over 18000 euro tax free. Over 65s can earn even more tax free because of the age credit.
Add up your personal credit, PAYE credit and age credit and multiple by 5.
This will give you your total earnings before you enter the tax net.
 
Freelance said:
Interest received on State Savings bonds does is fully excluded from all Income Tax calculations and from all DIRT calculations.
Click to expand...
Must it be declared though on your tax returns?

You are asked the question.......deposit interest received....etc.
 
Freelance: The line 'Interest received on State Savings bonds is fully excluded from all Income Tax calculations and from all DIRT calculations.'
is critical. Are you sure on this ?!

S class: When you say 'the interest might count towards the exemption.' I'm taking it you mean the €3k and not the bond interest?

SoyLentGreen: Yes indeed I declare all income.


Apologies to all for the poor formatting. I'm new to this!?
 
SoylentGreen said:
But are you required to do so if no tax is payable?
Click to expand...
Oh. Hadn't really thought.
My 1st state bond has just matured and I'm in a hurry to reinvest with bank interest rates where they're at.
I too would like to know the answer to this when doing my return for 2024.
 
I do not file form DE1 with my financial institutions. They charge my DIRT, which I then report on Form 11 each year, and receive a refund of it (possibly minus USC, depending on total income) due to being over 65 and with total income below the exemption limit. I am quite certain that deposit interest does count towards the exemption limit.

I might be wrong, but I do not think there is anywhere to report State Savings income on Form 11/12, so I don't think it counts towards the exemption limit.

S class said:
Don't get to hung up about the 18000 euro tax exemption.
It is largely useless to most over 65s.
Click to expand...

There are certainly people for whom it is useful, though. My income comes mostly from deposits, so the exemption saves me quite a bit of tax.
 
charlie007 said:
Freelance: The line 'Interest received on State Savings bonds is fully excluded from all Income Tax calculations and from all DIRT calculations.'
is critical. Are you sure on this ?
Click to expand...

Don’t take my word for it….. see here. I don’t think it could be much clearer.

Are Prize Bonds winnings or State Savings products subject to Tax?​


Fixed Term Products, Instalment Savings and Prize Bonds winnings are not subject to Deposit Interest Retention Tax (DIRT) and are exempt from Income Tax, Pay Related Social Insurance and Capital Gains Tax in Ireland.

Deposit Accounts are subject to DIRT in Ireland.

You may have other tax liabilities depending on your specific circumstances. We would therefore recommend that you consult your Tax Adviser.
Click to expand...

What I can’t comment on is your entitlement to DIRT exemption per form DE1. A lot of people who were exempt some years back have fallen back into the net and lost the exemption due to increases in pension payments, increases in deposit rates and the failure to index link the €18k/€36k threshold. A state pension together with a very small private pension and some deposit interest (other than exempted state savings) or others income will have you over that threshold in jig time.

Deposit interest, other than exempted state savings deposit interest, definitely does count towards the €18k/€36k threshold.
 
basilbrush said:
I do not file form DE1 with my financial institutions. They charge my DIRT, which I then report on Form 11 each year, and receive a refund of it (possibly minus USC, depending on total income) due to being over 65 and with total income below the exemption limit. I am quite certain that deposit interest does count towards the exemption limit.

I might be wrong, but I do not think there is anywhere to report State Savings income on Form 11/12, so I don't think it counts towards the exemption limit.



There are certainly people for whom it is useful, though. My income comes mostly from deposits, so the exemption saves me quite a bit of tax.
Click to expand...
Thanks for that...
I've opened a few new accounts and might just bring forms DE1 directly to the banks for simplicity?
I'll get the state pension at the end of next year and the €18k exemption, or maybe higher?, will
then be very useful.
 
Freelance:
Thanks for that...
It is indeed very clear!
When I do get the state pension I expect deposit interest to take me over the exemption, but I can of course plan for that.
 
Thought I might mention a flexibility in State Bonds that might not be appreciated by everyone.
Interest is of course back loaded and whatever you cash in early will earn little.
However what remains still enjoys the full advantages that were there at the start.
I also understand there is no restriction on the number of times you can do this.
 
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