Significant tax relief is now in effect for Saint Lucians as sweeping changes to the country’s income tax regime apply to the 2025 income year. The amendments, recently passed in Parliament, increase child allowances, expand deductions for mortgage interest and medical expenses, raise investment caps, and make pension income fully tax-exempt.

Taxpayers filing for the 2025 income year can expect notable changes to their returns following the legislative reforms.

According to Cyprian Montrope, Acting Deputy Comptroller at the Inland Revenue Department, the measures stem from recent budget announcements and are intended to deliver meaningful financial relief to families and workers.

“One, the child allowance that persons would have normally been claiming $1,000 for children up to 10 years and up to $2,000 for older children has now significantly increased. All children in primary and secondary school can now claim up to $5,000 per child. If the child is attending university or an institution providing equivalent tertiary education, the allowance is now $10,000 per child.” Montrope explained.

The dependent relative allowance has also increased substantially, moving from $350 to $5,000. Homeowners stand to benefit as well. The mortgage interest deduction cap has increased from

$18,000 to $40,000, excluding personal and medical allowances.

“Credit union shares were previously capped at $5,000 and have now increased to $10,000. All of these increases are geared towards reducing the amount of taxes that an employee would pay on a regular basis. In terms of medical expenses, certain allowances that were not previously permitted such as fertility treatment can now be claimed.” Montrope noted.

Additionally, all investments made during the filing period both local and regional can now be claimed up to a maximum of $10,000.

One of the most impactful changes affects pensioners. Pension income is now fully exempt from taxation.

“In earlier times, pension income was included up to a certain amount and the balance taxed. Now, entire pension income whether from an approved pension fund, employer pension, government pension, or NIC pension is 100% exempt. Pensioners will only be taxed on income derived from new employment, provided it falls within the taxable brackets,” Montrope stated.