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The Estonian government is canceling the 2% defence tax, which was scheduled to come into effect temporarily from the beginning of 2026. The defence tax will be replaced by a 2% increase in value-added tax. VAT is currently 22%, but will increase to 24% in July this year. VAT was already increased at the beginning of this year, from 20% to 22%.<\/p>\n
Income taxation will also change starting in 2026. This year, income tax increased from 20% to 22%, and from the beginning of 2026, the tax rate will be 24% for everyone. For those who have Estonia’s second pension pillar (voluntary funded pension), the total income tax will increase to 24, 26 or 28% from the beginning of next year.<\/p>\n
The 2% defence tax planned for entrepreneurs will also be canceled. The dividend tax, however, will increase from 22% to 24%. Taxation for small entrepreneurs will also increase by two percentage points to 22%.<\/p>\n
“The change will lighten the tax burden both for individuals and companies, and restore the logic of the tax system. Unfortunately, part of the change is that the fixed-term nature of the tax will be abandoned, as geopolitical developments no longer allow for temporary solutions regarding defence spending,” says Minister of Finance J\u00fcrgen Ligi<\/b> in an interview<\/span><\/a><\/span> with ERR.<\/p>\n <\/p>\n In Estonia, citizens have begun to talk about an \u201cendless tax circus\u201d as the cost of living has risen and taxation has become more stringent, first as a result of the pandemic, then the war and inflation. The car tax that came into effect this year and other tax increases have aroused public discontent.<\/p>\n In particular, the higher income tax rate that will come into effect next year raises concerns about how the poor will get by in their daily lives. Estonia has a flat income tax, as opposed to a progressive income tax.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" The Estonian government is canceling the 2% defence tax, which was scheduled to come into effect temporarily from the … Read more<\/span><\/p>\n","protected":false},"author":10,"featured_media":146641,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"ngg_post_thumbnail":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[50],"tags":[15876,25267,25268,25269,25270,25271,25272],"class_list":["post-146647","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-estonia","tag-income-tax","tag-estonian-taxation","tag-taxation","tag-taxation-in-estonia","tag-tax-reforms-in-estonia","tag-flat-tax","tag-politics"],"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/balticguide.ee\/en\/wp-json\/wp\/v2\/posts\/146647","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/balticguide.ee\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/balticguide.ee\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/balticguide.ee\/en\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/balticguide.ee\/en\/wp-json\/wp\/v2\/comments?post=146647"}],"version-history":[{"count":1,"href":"https:\/\/balticguide.ee\/en\/wp-json\/wp\/v2\/posts\/146647\/revisions"}],"predecessor-version":[{"id":146648,"href":"https:\/\/balticguide.ee\/en\/wp-json\/wp\/v2\/posts\/146647\/revisions\/146648"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/balticguide.ee\/en\/wp-json\/wp\/v2\/media\/146641"}],"wp:attachment":[{"href":"https:\/\/balticguide.ee\/en\/wp-json\/wp\/v2\/media?parent=146647"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/balticguide.ee\/en\/wp-json\/wp\/v2\/categories?post=146647"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/balticguide.ee\/en\/wp-json\/wp\/v2\/tags?post=146647"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Tax reforms in Estonia are making everyday life more difficult for citizens <\/b><\/h2>\n