Tax Changes in Estonia 2026 – What Every Entrepreneur Needs to Know?

🧾 1. The biggest change: abolition of the tax hump

From 2026:

• Uniform tax-free income: 700 € per month (8400 € per year)
• No longer depends on income
• The complicated graduated system ("tax hump") is abolished 

👉 What it means for entrepreneurs:

• simpler payroll
• fewer errors and surprises in employee taxes
• employees retain more net salary

💼 2. Income tax remains at 22%

• Income tax rate: 22%
• The planned increase to 24% was cancelled 

👉 Impact:

• labour costs do not increase due to income tax
• predictable environment for entrepreneurs

🏢 3. Corporate taxation (still unique)

• Undistributed profit → 0% tax
• Distributed profit (dividends) → 22/78 system (~28%)

👉 Still applies:

• funds can be reinvested tax-free
• tax arises only upon distribution