How Much Pension Can I Have Tax-Free? A Guide for New Retirees
Pension Amount Evading Taxation: What's the Deal? - Inquiring about the potential pension amount exempt from taxation obligations.
By Nadine Oberhuber~ 2 Min Read
Ever wondered how much pension you can receive without paying a dime in taxes? The Ministry of Finance provides insight annually. In 2024, new retirees can receive up to 16,243 euros in annual gross pension tax-free, while married couples can double this amount. Note that this tax-free allowance decreases gradually each year, as the proportion of pension subject to taxation grows.
In the year 2024, 83% of the gross pension was subject to taxation. The initial plan aimed for 100% taxation by 2040, but the Growth Opportunities Act has now pushed that goal to 2058. This means that deferred taxation applies, essentially allowing workers to contribute slightly more of their untaxed income to retirement savings each year.
Tax Returns Required for some Retirees
The purpose of this regulation is to create a fairer playing field for retirement savings and encourage private savings. Retirees contribute their untaxed income initially, and only payments from retirement contracts are subject to taxation. The assumption is that retirees will pay lower taxes. Hence, savers for retirement receive a tax advantage.
If you had over 11,604 euros in pension income in the previous year (2024), you must file a tax return. In 2025, the limit increases to 12,084 euros. If your pension income is around 1,000 euros per month or more after accounting for other deductions, you'll likely need to file a tax return. However, it's possible to exceed the tax-free allowance due to advertising costs, special deductions, or extraordinary burdens. The tax office will evaluate these aspects on a case-by-case basis.
Understanding Taxation Proportions
The Ministry of Finance calculates taxation as follows: New retirees in 2024 with a tax-free annual pension of 16,243 euros have 13,481 euros subject to taxation (83%). Retirees who were already retired in 2005 can receive 50% of their pension income tax-free, equating to a tax-free amount of 19,758 euros, or 1,610 euros per month.
- Tax
- Pension Taxation
- New Retirees
- BMF
Additional Insights:In the US, high-income earners may find their Social Security benefits taxable, with up to 85% being taxed depending on combined income levels. In 2025, taxation begins when combined income exceeds $25,000 for individuals or $32,000 for married couples filing jointly[3]. Retirement planning updates in 2025 include higher contribution limits for retirement accounts like 401(k) and IRAs[2]. However, these updates do not specifically address pension taxation rates. The Historic Tax Credit Growth and Opportunity Act of 2025 focuses on historic tax credits rather than pension taxation[1]. Employee Stock Ownership Plans (ESOPs) have also been introduced to boost retirement security, benefiting employees by aiding financial prosperity during retirement[5].
In summary, the taxation proportion for new retirees in relation to pension taxation under the Growth Opportunities Act remains uncertain, as there is no specific information available as of now. Keep an eye out for updates and professional advice regarding your personal retirement planning.
- The tax-free allowance for a new retiree's pension, as provided by the Ministry of Finance in 2024, is 16,243 euros per year.
- According to the Growth Opportunities Act, the goal of 100% pension taxation by 2040 has been pushed to 2058, permitting deferred taxation and allowing workers to contribute more of their untaxed income to retirement savings each year.
- If a retiree had over 11,604 euros in pension income in the previous year (2024), they are required to file a tax return, with the limit expected to increase to 12,084 euros in 2025.
- The employment policy, in terms of retirement savings, encourages fairness and personal-finance management, offering tax advantages to savers for retirement and aiming to create a more equitable retirement landscape.
