2026 Tax Changes: How Will They Affect Your Employees’ Take-Home Pay?

A new year brings not only new business goals but also changes in legislation. 2026 is no exception – adjustments to the tax calculation procedure have come into force. Both employers and employees are asking a logical question: "Will my take-home pay change, and if so – by how much?" In this article, we look at the most significant changes and how they affect monthly net income.

1. Fixed Personal Income Tax (PIT) Rate

One of the most notable changes this year is the application of the Personal Income Tax (PIT) rate. In 2026, the standard PIT rate is calculated at 25.5%. What does this mean for the employee? It simplifies the calculation system, making it more predictable. However, it is important to remember that PIT is calculated from the amount remaining after social insurance contributions (VSAOI) and applicable tax allowances have been deducted from the gross salary.

2. State Social Insurance Mandatory Contributions (VSAOI)

Social contributions remain a vital component of payroll taxes, forming the employee's social guarantees (pensions, sickness benefits, etc.).

• Employee’s share: Remains at 10.5%. This amount is deducted directly from your gross salary.

• Employer’s share: Is set at 23.59%. This part does not appear in the employee's gross salary but forms the total labor cost for the company.

3. Non-taxable Minimum and Allowances – The Key to Higher Net Pay

Allowances have the greatest impact on how much money ultimately reaches your bank account. In 2026, the current figures are as follows:

• Non-taxable minimum: The maximum monthly non-taxable minimum is projected at 550 EUR (depending on the income level). This means that for low and middle-income earners, a larger portion of their salary is not subject to tax.

• Allowance for dependents: A tax allowance of 250 EUR is granted for each registered dependent (child, non-working spouse). Example: If you have two children, your non-taxable amount increases by 500 EUR (2 x 250 EUR). This significantly reduces the PIT payment and increases the net salary.

4. What Does It Look Like in Figures?

To understand how these changes affect your specific situation, it is best to perform an individual calculation. Every situation is different – the number of dependents, disability status, or whether the "tax booklet" has been submitted can drastically change the final result. We have developed a convenient tool that already incorporates all the new 2026 rates.

Conclusion

Although the tax system may seem complex, the 2026 changes are aimed at stabilizing the system. For entrepreneurs, it is essential to ensure that payroll accounting systems are updated with the new parameters. For employees, it is important to check whether all dependents are correctly registered in the SRS EDS system to receive the maximum allowance.