Tax breaks for poor pensioners

Any pensioner currently receiving a state pension but lacking an income-based pension will receive a tax break of around 2,500 kronor ($414) per year, according to a new proposal from the government.

Prime Minister Fredrik Reinfeldt (Mod), together with party leader colleagues Deputy Prime Minister Maud Olofsson (Cen), Education Minister Jan Björklund (Lib) and Social Minister Göran Hägglund (ChrDem) presented the proposal in the Dagens Nyheter newspaper on Tuesday.

The new tax break is enabled by simply raising the threshold for basic deductions for those on low pension incomes. All pensioners who turn 65 years of age in 2009 will be eligible for the tax break as of January 1st, 2009. For those on higher incomes, the basic deductions threshold is to be gradually reduced in accordance with income.

The new proposal stands to benefit women in particular. Historically, women often have lower pensions than men, as they have often spent many years working in the home, thus not qualifying for higher pensions.