Taxes in Estonia 2026: tax rates and changes
All the key 2026 Estonian tax rates for business owners and accountants in one place: income tax, basic exemption, social tax, VAT, unemployment insurance, dividends, per diem and car allowance.
Estonian tax rates 2026 – summary table
| Tax / threshold | 2026 |
|---|---|
| Income tax (withheld) | 22% |
| Basic exemption (tax-free income) | €700 a month / €8,400 a year, regardless of income |
| Basic exemption at retirement age | €776 a month / €9,312 a year |
| Social tax | 33%; monthly base for the minimum €886 → minimum social tax €292.38 a month |
| Unemployment insurance | employee 1.6%, employer 0.8% |
| Funded pension contribution | 2%, 4% or 6% (employee’s choice) |
| VAT | standard rate 24%; accommodation 13%; books, press, medicines 9% |
| Income tax on dividends | 22/78 of the net amount (the 14/86 reduced rate and the 7% withholding are gone) |
| Security tax | the 2% security tax on salaries and corporate profit was not introduced |
| Foreign per diem, tax-free limit | €75 a day for the first 15 days of business travel in a calendar month, €40 for each day after that |
| Personal car allowance | €0.50/km, up to €550 a month per employer (with a mileage log) |
| Cap on the daily rate of sickness benefit | €126.87 (from 1 January 2026) |
| Minimum wage | €886 (€5.31/h) January–March; €946 (€5.67/h) from 1 April |
What changed in 2026
- The basic exemption is now the same for everyone – €700 a month. The old income-dependent calculation (up to €654, tapering off from €1,200) is gone. Unused exemption cannot be carried into the next month. The employer applies the basic exemption only if the employee has handed in a written application – see our separate post on income tax 2026 and the basic exemption.
- The monthly base for social tax rose to €886 (2025: €820), and the minimum social tax to €292.38 (2025: €270.60).
- The standard VAT rate is 24% (up from 22% on 1 July 2025). On invoices and contracts signed before the increase, check whether the price includes VAT.
- No security tax. Of the security tax act passed in 2025, only the 24% VAT rate and the 22% income tax rate survive; the extra 2% income tax on salaries and corporate profit was not introduced for 2026.
- The minimum wage rises mid-year – see the separate post on the minimum wage 2026.
What a business owner should review
- Payroll: basic exemption applications (€700), the new minimum wage from April, the minimum social tax for part-time staff.
- VAT: price lists and contracts at 24%, prepayment invoices during the transition.
- Dividends: the tax is 22/78, that is 22% of the gross amount; there is no 14/86 reduced rate.
- Business trips and mileage logs: the per diem and car allowance limits are the same as in 2025.
Need help making sure your company’s payroll and tax returns reflect these changes correctly? See our accounting service and pricing.
