An increase in the threshold at which people aged 65 or over enter the tax net in the 2000 Budget will remove almost 10,000 elderly persons from the income tax brackets altogether.
The Minister for Finance, Mr McCreevy, announced a £1,000 increase in the threshold, raising it from £6,500 to £7,500 for single or widowed people aged 65 or over.
For married couples aged 65 or over, the threshold is being increased from £13,000 to £15,000. No increases were announced for those under 65 years of age. The general exemption limit will remain at £4,100 for single or widowed people under 65, and at £8,200 for married couples.
Raising the exemption limits removes people from the tax net because when the income of an individual or couple falls below this level, they do not have to pay any tax.
In his last Budget, Mr McCreevy removed 15,000 people aged over 65 from the tax net. In yesterday's Budget, he also announced an effective doubling of the age allowance for taxpayers aged 65 or over. It is being increased from £400 per annum to £800 for single and widowed people, and from £800 to £1,600 for married couples where one or both spouses is 65 or over. However, it will now be available at the standard rate of income tax only.