{"id":38353,"date":"2025-12-22T11:21:35","date_gmt":"2025-12-22T09:21:35","guid":{"rendered":"https:\/\/www.simplbooks.ee\/?p=38353"},"modified":"2025-12-29T10:30:40","modified_gmt":"2025-12-29T08:30:40","slug":"tax-changes-in-estonia-in-2026","status":"publish","type":"post","link":"https:\/\/www.simplbooks.ee\/en\/blog\/tax-changes-in-estonia-in-2026\/","title":{"rendered":"Tax changes in Estonia in 2026"},"content":{"rendered":"

The year 2026 promises to be calmer in the world of taxation. Some changes will take place, but the list will be significantly shorter than in the previous year.<\/span><\/p>\n

 <\/p>\n

1) The planned income tax increase will not happen<\/span>
\n<\/b>Let\u2019s start with the positive news. Although a law had already been adopted that would have increased both personal and corporate income tax rates to 24% as of 1 January 2026, this decision has been repealed. This means that the income tax rate will remain at its current level of 22%<\/strong>.<\/p>\n

 <\/p>\n

2)<\/b> There will be no corporate profit tax<\/b><\/span>
\n<\/b>According to an earlier plan, a corporate profit tax was to enter into force on 1 January 2026 as part of the security tax package, with a proposed rate of 2% of a company\u2019s profit. In June of this year, the parliament decided to abandon the introduction of the corporate profit tax.<\/span><\/p>\n

 <\/p>\n

3) The progressive income tax system will be abolished<\/b><\/span>
\n<\/span>As of 2026, the complex and controversial system of gradual reduction of the tax-free allowance will be abolished. The previous system, where the tax-free allowance decreased as income increased, will be replaced by a simpler and clearer arrangement.<\/p>\n

Under the new rule, a uniform tax-free allowance of 700 euros per month (8,400 euros per year)<\/strong> will apply to everyone, regardless of income level. The tax-free allowance can be applied, based on a written application by the employee, with only one employer or payer at a time. For people of retirement age, a higher tax-free allowance will remain in place, amounting to 9,312 euros per year (776 euros per month)<\/strong>. This change makes the tax system easier to understand, and the biggest beneficiaries are middle- and higher-income earners who previously lost part or all of their tax-free allowance.<\/p>\n


\n<\/span>
\n4) Decision-making power over land tax moves to local governments<\/span>
\n<\/b><\/span>While in 2025 the increase in land tax was capped nationwide at 50%, this limitation will be removed as of 2026. Going forward, each local government can decide on the annual increase itself, which may be up to 100% (or at least 5 euros).<\/p>\n

In addition, the tax exemption for land under a primary residence will change. Instead of a land-area-based exemption, a value-based allowance will be introduced, the amount of which will also be determined by the local government and may range from 0 to 1,000 euros. This means that the tax burden may start to differ significantly depending on which municipality or city the property is located in.<\/p>\n

 <\/p>\n

5) Motor vehicle tax relief for families with children<\/span>
\n<\/b>The motor vehicle tax that entered into force this year has received an important addition aimed at families with children. Parents of children up to and including the age of 18 are eligible for a tax relief. The amount of the relief is up to 100 euros per child per year<\/strong>. If both parents own a car, the tax reduction amount is divided equally between them. The relief applies to M1 and N1 category vehicles<\/strong>.<\/p>\n

It is also noteworthy that the tax reduction is applied automatically by the Tax and Customs Board, and parents do not need to submit a separate application. The change entered into force retroactively, meaning that motor vehicle tax notices already issued for 2025 were also adjusted.<\/p>\n

More detailed information about all tax changes in 2026 can be found on the website of the Tax and Customs Board.<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

The year 2026 promises to be calmer in the world of taxation. Some changes will take place, but the list will be significantly shorter than in the previous year.   1) The planned income tax increase will not happen Let\u2019s start with the positive news. 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