Income tax in Estonia will grow to 24%
At an extraordinary meeting, the financial commission Riigikogu decided to send to the first reading amendments related to the abolition of security tax.
According to the bill, the security tax, which was originally planned until 2028, will be canceled, including the tax income tax and taxation of individuals from the first euro, the Riigikogu press service reports on Friday.
The chairman of the financial commission Anneli Ackermann explained that the amendment proceeds from the goal to ensure the stability of financing the state’s expenses for defense, for which, for a long -term strengthening of defense capacity from 2026, the total income tax rate will be increased to 24 %, and income tax from entrepreneurship – up to 22 %. In force, there will be an increase in turnover tax to 24 % from July 2025. It will also become unlimited.
“As for the income tax for entrepreneurship, we will return to the simple, uniform and more convenient decision for entrepreneurs: the enterprise will have to pay income tax only from distributed profit, and not the current one. This will help stimulate both entrepreneurship and economic growth, ”Akkermann said.
She added that the amendments will also positively affect the population of Estonia, especially more vulnerable groups of taxpayers, since income tax will be calculated after deducting income tax. The current decision would mean a tax obligation of 2 % from the first euro.
To introduce a tax on security tax, a tax-so-consumed department was to introduce changes to a number of services. The expenses of the tax-soil department for the necessary IT development would amount to about 950,000 euros in 2025, 735,000 in 2026 and 525,000 euros in 2027. Now the need for this disappears. For the introduction of the security tax, the IT solutions should also have been introduced by the Department of Social Insurance, the Cashcom of Health and the Estonian Cashier in Unemployment. As a result of changes, this is also no longer necessary.
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