Estonia Income Tax 2026: Flat 22%, Basic Exemption, and Net Salary
June 2026 · 7 min read
Estonia was one of the world's first countries to adopt a flat income tax when it transitioned to a market economy in the 1990s. In 2024, the rate was raised from 20% to 22% to fund increased defense spending, and this rate remains in place for 2026. What makes Estonia's system distinctive is the phasing-out basic exemption that helps lower earners keep more of their income. This guide explains how it all works.
The flat 22% income tax (tulumaks)
Estonia levies a flat 22% tax on personal income. However, the system is not purely flat because of the tulumaksuvaba miinimum (basic exemption), which reduces or eliminates income tax for lower earners.
The basic exemption: up to €7,848
For 2026, the basic exemption works as follows:
- For annual income up to €14,400: the full exemption of €7,848 applies
- For annual income between €14,400 and €25,200: the exemption phases out linearly to zero
- For annual income above €25,200: no basic exemption; the full 22% applies to all income
This means an Estonian worker earning €14,400/year effectively pays 22% only on (14,400 minus 7,848) = €6,552, giving an income tax of €1,441 and an effective rate of about 10%.
Employee social contributions: 3.6%
Estonian employees pay two contributions:
| Contribution | Rate |
|---|---|
| Unemployment insurance (töötuskindlustus) | 1.6% |
| Funded pension II pillar (kogumispension) | 2.0% |
| Total employee contributions | 3.6% |
Note: Employers pay a much larger share (33%) in social tax (sotsiaalmaks) on top of gross salary. The employee burden is unusually low by EU standards.
Net salary examples for 2026
| Gross (annual) | Employee SS (3.6%) | Basic exemption | Income tax (22%) | Net salary |
|---|---|---|---|---|
| €15,000 | €540 | €7,614 | €1,620 | €12,840 |
| €25,000 | €900 | €0 (phased out) | €5,500 | €18,600 |
| €40,000 | €1,440 | €0 | €8,800 | €29,760 |
Use the GrossToNet Estonia calculator to calculate your net salary for 2026.