Pensioners will be taxed if they receive larger than average State Pension entitlements
Around 4 million on the State Pension will be taxed next year(Image: Getty Images)
The Department for Work and Pensions (DWP) has confirmed the number of people who will be taxed on their State Pension in 2026.
Pensioners will only be taxed if they receive larger than average State Pension entitlements, such as those who get additional earnings-related State Pension, inherited awards or Protected Payments, according to the Government.
According to current estimates, around 30% – or 4 million people – on the State Pension will be liable for tax on their State Pension in 2026/27.
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Parliamentary Secretary for the Treasury Torsten Bell said: “The headline rates of the basic and new State Pensions are currently below the level of the Income Tax Personal Allowance, so pensioners for whom that is their sole income pay no income tax.
“It is pensioners with larger than average State Pension entitlements, because of, for example, entitlement to additional earnings-related State Pension, inherited awards or Protected Payments under the new State Pension who will be liable for income tax on their State Pension income.
“Utilising DWP’s pensioner benefit forecasting model and the State Pension caseload forecast published at Spring Statement 2025, it is estimated that around 30% (approximately 4m) of State Pension recipients will be liable for tax on their State Pension award administered by DWP in 2026/27.
“This figure is a modelled estimate from DWP’s pensioner benefit forecasting model and therefore should not be treated as an official statistic. This is consistent with current personal tax allowance policy and the OBR’s Spring Statement 2025 State Pension forecasts. Tax liabilities considered are from DWP administered State Pension awards only.”
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It comes after State Pension payment rates increased in April. The amount it increases by each year is worked out by the triple lock – a mechanism used to ensure the payment rates rise each year in line with whichever is higher out of inflation, earnings or 2.5%. This is to prevent the value of pensions being reduced by cost of living pressures.
In 2025, they went up by 4.1% in line with the growth in average earnings.
State Pension rates
Full New State Pension
Weekly payment: £230.25 (from £221.20)Four-weekly payment: £921 (from £884.80)Annual amount: £11,973 (from £11,502)
Full Basic State Pension
Weekly payment: £176.45 (from £169.50)Four-weekly payment: £705.80 (from £678)Annual amount: £9,175 (from £8,814)