The Estonian Government’s decision to abandon the income tax increase

Prime Minister Kristen Michal announced at the government press conference on September 18 that the planned two percentage point income tax increase scheduled to take effect at the beginning of 2026 will be abandoned.

The decision was made as part of budget negotiations. Initially, it was planned to raise the personal and corporate income tax to 24 percent.

Together with the increase in the tax-free minimum, the state will lose 780 million euros in tax revenue. The tax burden decreases from 36.6 percent to 35.2 percent.

NB! This political decision is not yet law, but if no surprises arise, it will be incorporated into legislation soon.