To finalize the above-described decisions, the Estonian Parliament must adopt the respective amendment to the Income Tax Act in the coming months.
Key Highlights of the 2026 Income Tax Rules
Income tax rate: The current 22% rate remains unchanged in 2026 for both individuals and corporations.
Tax exemption for residents: Starting in 2026, the annual tax-exempt basic allowance for resident individuals will increase to EUR 8,400, regardless of income level.
Tax exemption for retirees: For individuals who have reached retirement age, the annual tax-exempt allowance remains at EUR 9,312.
Corporate taxation: No changes are expected in the principles of corporate income tax in comparison to 2025.
These updates provide stability and predictability for businesses and individuals, ensuring that Estonia continues to maintain a competitive tax environment in 2026.
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