Change in the income tax rate in Estonia

The income tax rate currently applicable in Estonia is 21%. The tax rate is subject to change in 2015 when the income tax rate will be lowered to 20%.

During the years 2004 till 2008 income tax rate in Estonia was lowered from 26% to 21%. Therefore the planned deduction in 2015 with the previous deductions will make the deduction to be 6% altogether, which is an important drop in the tax burden.

The tax deduction by 1% in 2015 will lower the state revenue by 70 million euros per year. When calculating by the current average wages the tax burden of a person  receiving average wages will be 75 euros lower for one calendar year. Since the rise in average wages is expected, the tax burden will likely decrease by more than 75 euros in year 2015.

The decrease in income tax rate will have positive international impact and will help to improve Estonia’s competitivity to attract investments and job positions with high added value.