Morocco Exempts 164,744 Retirees from Taxes in Landmark Reform

Morocco’s 2025 Finance Bill introduces significant tax reforms, offering relief to retirees by gradually eliminating income tax on pensions and annuities. Starting in 2025, retirees will benefit from a 50% reduction in taxes, with a complete exemption slated for January 2026.

Government spokesperson and Minister Delegate for Relations with Parliament, Mustapha Baitas, confirmed that the reform will benefit 164,744 retirees, costing the government around MAD 1.2 billion (approximately $118 million). Baitas added that nearly 86% of these beneficiaries are registered with the Moroccan Pension Fund (CMR), underscoring the government's ongoing fiscal overhaul.

The pension exemption forms part of a broader strategy aimed at restructuring Morocco’s tax system. In 2024, the Finance Bill had already reduced taxes for public sector employees, amounting to MAD 5 billion ($493 million). However, Baitas emphasized that historically, public servants bore a disproportionate share of the tax burden, as other sectors were often exempt or under-taxed.

The government's reform aims to create a more equitable tax system by expanding the tax base and ensuring that sectors previously exempt from taxes contribute their fair share. Public servants and salaried employees, for instance, now enjoy an average tax reduction of MAD 400 ($39), part of an effort to ease the burden on compliant taxpayers and increase revenue for the state.

This reform initiative is aligned with recommendations from Morocco’s National Tax Conference and the fiscal reform framework law. The government is working to address the imbalance in tax contributions, focusing on fairness and sustainability. Baitas highlighted that the government’s actions are about more than just tax relief; they are about integrating new contributors into the system while supporting those who have traditionally carried the load.

The pension and annuity tax exemption also fits into a broader economic strategy designed to balance immediate financial relief for retirees with long-term fiscal stability. Budget Minister Delegate Fouzi Lekjaa reaffirmed the government’s commitment to social equity, stressing the importance of supporting vulnerable groups. Lekjaa also noted that the government plans to include additional retirees in the second revision of the 2025 Finance Bill, acknowledging areas for improvement in the initial phase.

This sweeping tax reform represents a key step in Morocco's efforts to modernize its fiscal policies and promote social fairness, all while absorbing the reform's financial costs to better support retirees and vulnerable populations.