State pension rise confirmed in Budget but poorest households protected from paying tax

State pensioners on low incomes will be protected from paying income tax, the Chancellor announced in his Budget today. The new state pension is set to rise by £489 to £13,036 a year from next April, taking it above the tax-free personal allowance of £12,570 for the first time. But to stop those that rely only just the state pension from paying tax, the personal allowance for low income pensioners will also rise to match the full amount of state pension.

This announcement was confirmed today by John Healey in his Budget. The Chancellor said: “For pensioners, I am delivering the new Pension Tax Allowance – so that pensioners with income up to the value of the full new State Pension will not pay Income Tax in this Parliament.” However, millions of pensioners with higher incomes will still pay income tax. This could include people with private pensions or those who receive higher state pension amounts.

Stay up to date with everything announced in our Budget 2026 live coverage . To see more of the stories you love from The Mirror and to find them easily in Google then make us your preferred source. Free and easy-to-do, just click on the link here to find more from The Mirror at the top of your feed. It comes after Prime Minister Andy Burnham announced that Labour plans to adjust the triple lock, which is used to determine how much the state pension will rise by, from April 2030.

The triple lock increases the state pension every April by whichever is higher out of inflation (using the previous September inflation figure), wages (average growth between May and July) or 2.5%. Under the plans, the state pension would continue to rise every year at least by inflation or 2.5%, but it would still track average wages over time. The state pension overhaul would help to fund a new National Care Service in England. For next year, the state pension will rise by 3.9% in line with wage growth.

This would put someone on the full new state pension on course to receive £250.70 a week from next April – up from £241.30 a week currently. The state pension is based on your National Insurance record, so you may receive less than this if you have gaps in your contributions. Someone on a full basic state pension would receive £192.10 a week, up from £184.90, under a 3.9% increase. This would put the basic state pension at around £9,989 per year.

But many people on the old pension system receive additional top-ups that boost their income, through either SERPS (state earnings-related pension scheme) or the state second pension. Some people would also receive higher amounts of the state pension if they deferred their payments.