Tax-Free Pension: How Much Can You Earn Without Paying Dues?
Tax-Free Pension Amount: A Simplified Guide to the Exemption Limits - Determining your pension exemption amount: Insight into your tax-free retirement benefits.
By Nadine Oberhuber* ~ 2 Min read
In 2024, new retirees in Austria can receive up to €16,243 per year in pension income, tax-free. This amount applies to singles, while for couples, it doubles. However, this threshold decreases annually, with older retirees who retired in 2005 receiving up to €19,758 tax-free. This shift in pension taxation began in 2005, progressively lowering the tax-free allowance each year.
By 2024, 83% of a retiree's pension was subject to taxation. Initially, the plan was to reach 100% taxation by 2040; however, the full taxation will now not apply until 2058, according to the Growth Opportunities Act. As a result, workers can save a bit more each year without taxation in retirement contributions.
Tax Returns for Some Retirees
The regulation aims to promote fairness in retirement savings and encourage younger individuals to save privately. Retirees with pension income over €11,604 in the previous year (2024) are expected to file a tax return. In the current year, 2025, the limit for filing a tax return rises to €12,084. Any retiree with pension income over this amount will be taxed from around €1,000 per month—unless they qualify for other deductions such as advertising costs or special allowances.
Taxation Ratio of Retirement Income
The Ministry of Finance determines the calculation as follows: In 2024, new retirees receiving €16,243 per year tax-free (€1,323 per month) have pension income subject to taxation of €13,481 (83%).
Retirees aged 65 and older who had already retired in 2005 can still enjoy 50% of their pension income tax-free, amounting to €19,758 per year (€1,610 per month).
TaxRetirement income taxationNew retireesBMF
Enrichment Data:
In the USA, the tax-free allowance for retirees is more flexible and influenced by the standard deduction and senior considerations. For 2025, married couples filing jointly receive a standard deduction of $33,200, while those aged 65 and older may qualify for an additional $3,200 in deductions for a total of $36,400. However, upcoming legislation may further increase standard deductions and offer a 'senior bonus' deduction, enhancing the allowance for those aged 65 and older. In 2025, retirees must file a tax return when their gross income (including pensions, Social Security, interest, dividends, etc.) exceeds the standard deduction for their status.
- The community policy could be revised to ensure fair taxation of retirement income, taking into account the financing aspect and personal-finance implications for retirees.
- Understanding the employment policy of various countries, such as Austria and the USA, can provide valuable insights into the tax-free allowance and retirement income taxation for their respective citizens.
