Pensioners: 50% income tax reduction in 2025, full exemption in 2026

The Finance Act (Loi de Finances) 2025 brought in a measure pensioners had long been waiting for: personal income tax (IR) on pensions from basic retirement schemes is being phased out. This happens in two stages.

The timetable

Year	Basic pensions	Supplementary pensions
2024	Taxable at the scale rates, after allowance	Taxable at the scale rates, after allowance
2025	50% reduction in the IR due on these pensions	Taxable
2026 onwards	Full exemption	Taxable, except CIMR annuities paid under a group contract, exempt since the Finance Act 2026 (art. 57-27° of the CGI)

Which pensions are exempt?

The exemption, set out in article 57-27° of the General Tax Code (CGI), covers pensions and life annuities paid by basic schemes, in particular:

• the civil pensions scheme and the military pensions scheme (CMR);
• the general scheme of the collective retirement allowance scheme (RCAR);
• the National Social Security Fund (CNSS) scheme;
• basic schemes provided for in the statutes of Moroccan pension bodies.

Since 1 January 2026, the Finance Act 2026 has extended the article 57-27° exemption to pensions and life annuities, including lump-sum payments, paid by the CIMR to private-sector pensioners under a group supplementary pension insurance contract. The condition is that the contributions were withheld and paid over by the employer and deducted from taxable salary (article 28-III of the CGI).

Other supplementary pensions remain taxable: CIMR annuities that do not fall under a group contract, individual supplementary pension contracts (even if wholly or partly funded by the employer), annuities from individual payments into a group pension, and pensions from the RCAR supplementary scheme, CMR-Attakmili and voluntary retirement savings products.

Foreign-source pensions remain taxable at the scale rates after allowance, with the 80% reduction available for sums transferred permanently in non-convertible dirhams.

A reminder of the tax rules

Taxable pensions benefit from a flat-rate allowance of 70% on the portion of the gross annual amount up to 168,000 dirhams (MAD), and 40% above that. The remainder, after deducting compulsory health insurance (AMO) contributions, is taxed on the progressive scale.

Example for 2025

A married pensioner receives a basic pension of 240,000 dirhams gross a year.

• Allowance: 168,000 × 70% + 72,000 × 40% = MAD 146,400.
• AMO contributions withheld: MAD 4,800.
• Net taxable income: 240,000 − 146,400 − 4,800 = MAD 88,800.
• IR on the 2025 scale: 88,800 × 30% − 18,000 = MAD 8,640.
• 50% reduction: − MAD 4,320.
• Deduction for family dependants (wife): − MAD 500.
• IR due: MAD 3,820, compared with 8,640 − 500 = MAD 8,140 without the reduction.

In 2026, the same pension will be entirely tax-free.

Example for 2026: mixed income

Update of 19 October 2026: example and treatment of CIMR group annuities revised in line with the Finance Act 2026.

In 2026, a married pensioner receives a basic pension of 120,000 dirhams, a supplementary annuity of 80,000 dirhams paid outside a CIMR group contract (for example under an individual contract) and 180,000 dirhams of residential rent paid by individuals.

• The basic pension is exempt and is left out of the taxable base.
• Supplementary annuity: 80,000 − 70% = MAD 24,000 net taxable.
• Rent: 180,000 − 40% allowance = MAD 108,000 net taxable.
• Total taxable income: MAD 132,000. IR: 132,000 × 34% − 22,000 = MAD 22,880, less MAD 600 for family dependants (raised from 500 to 600 by the Finance Act 2026), i.e. MAD 22,280.

If the annuity is paid by the CIMR under a group supplementary pension insurance contract, it has been exempt since 1 January 2026 (article 57-27° of the CGI as amended by the Finance Act 2026). Only the MAD 108,000 of rent remains taxable: 108,000 × 34% − 22,000 − 600 = MAD 14,120.

This taxpayer will need to file a return of overall income before 1 March 2027.

Filing obligations

From 2026, the following do not need to file an annual return:

• pensioners who receive only exempt pensions (basic schemes and, since 2026, CIMR group annuities; article 86-7° of the CGI);
• those who receive only supplementary pensions paid by several bodies that withhold tax at source, where the total net taxable amount does not exceed 40,000 dirhams.

In all other cases, in particular where there is rental or business income, filing remains mandatory.

What about businesses?

Employers that pay pension top-ups or annuities to former employees must check the nature of the scheme so they apply the correct withholding.

Our Tax & legal and Payroll & HR teams help pensioners and businesses apply these new rules. To discuss your situation, contact us.