Gross vs net salary in Estonia: where the money goes

Three numbers, one salary

Gross is the amount agreed in the contract before taxes. Net is what lands in your account after withholdings. The total employer cost is gross plus employer taxes - what your job actually costs the company.

The employee cares about the first two numbers, the employer about the last two. Gross is the link between them: every tax is calculated from that figure, either taken out of it or added on top.

What is deducted from the gross?

Three payments are withheld from an employee's salary in 2026.

The order matters. Unemployment insurance and the pension contribution are calculated straight from gross. Income tax is calculated only on what remains after those two and the basic exemption. That is why income tax is never 22% of the whole gross: on 2000 € it would be 440 €, but the amount actually withheld is 270.16 €.

• Unemployment insurance: 1.6% of gross.
• Funded pension (pillar II): 2% (optionally 4% or 6%).
• Income tax: 22% on the amount above the 700 € monthly basic exemption.

The calculation in five steps

To check a payslip yourself, a basic calculator and five lines are enough. Our salary calculator follows the same logic and rounds each payment to the cent.

• 1. Unemployment insurance = gross × 1.6%.
• 2. Pension contribution = gross × 2% (or 4% / 6%).
• 3. Taxable income = gross - unemployment insurance - pension - basic exemption (0 if negative).
• 4. Income tax = taxable income × 22%.
• 5. Net pay = gross - unemployment insurance - pension - income tax.

Example: 2000 € gross

Take a 2000 € gross salary with the 700 € exemption and 2% pension. Net salary: 1657.84 €. The employee-side tax burden is about 17%.

The employer adds 33% social tax (660 €) and 0.8% unemployment insurance (16 €). Total cost: 2676 €. The 1657.84 € reaching your account is only 62% of that.

• Unemployment insurance 1.6%: 32.00 €.
• Funded pension 2%: 40.00 €.
• Taxable income: 2000 - 32 - 40 - 700 = 1228.00 €.
• Income tax 22%: 270.16 €.
• Net pay: 1657.84 €. Employer cost: 2676.00 €.

Example: the 946 € minimum wage

At a low salary the 700 € exemption covers most of the gross, so little income tax is left. The figures use the minimum wage in force from 1 April 2026 (it was 886 € from January to March). The employer cost follows the same formula here, because 946 € is above the 886 € monthly social tax base.

• Unemployment insurance: 15.14 €. Pension: 18.92 €.
• Taxable income: 946 - 15.14 - 18.92 - 700 = 211.94 €.
• Income tax: 46.63 €.
• Net pay: 865.31 €, or 91.5% of gross.
• The employer adds 312.18 € social tax and 7.57 € unemployment insurance, 1265.75 € in total.

Example: 1500 € gross

1500 € is a useful reference point: the exemption matters much less here than at the minimum wage, yet income tax is still under 11% of gross.

• Unemployment insurance: 24.00 €. Pension: 30.00 €.
• Taxable income: 1500 - 24 - 30 - 700 = 746.00 €.
• Income tax: 164.12 €.
• Net pay: 1281.88 €, or 85.5% of gross.
• Employer cost: 1500 + 495 + 12 = 2007.00 €.

Example: 3500 € gross

At a higher salary the exemption is worth the same 154 € a month, but it is small in relative terms. The employee's burden therefore moves closer to the sum of the statutory rates.

• Unemployment insurance: 56.00 €. Pension: 70.00 €.
• Taxable income: 3500 - 56 - 70 - 700 = 2674.00 €.
• Income tax: 588.28 €.
• Net pay: 2785.72 €, or 79.6% of gross.
• Employer cost: 3500 + 1155 + 28 = 4683.00 €.

What the four examples show side by side

Although everyone faces a 22% income tax rate, you keep 91.5% of the minimum wage, 85.5% of 1500 €, 82.9% of 2000 € and 79.6% of 3500 €. The reason is the exemption: a fixed 700 € is a large share of a small salary and a small share of a large one.

Relative to employer cost the picture differs. Net pay is 68.4% (946 €), 63.9% (1500 €), 62.0% (2000 €) and 59.5% (3500 €) of the total. The rest is split between the state and your own pension account, because a pillar II contribution is your asset, not a tax.

Pillar II at 2%, 4% or 6%: how much does net pay change?

The pension contribution is deducted before income tax. So each extra percentage point does not reduce your net pay in full: on 2000 €, moving from 2% to 4% sends 40 € more to your pension account, but net pay drops by only 31.20 €. The other 8.80 € is income tax you no longer pay.

• 2000 € at 2%: pension 40 €, income tax 270.16 €, net 1657.84 €.
• 2000 € at 4%: pension 80 €, income tax 261.36 €, net 1626.64 €.
• 2000 € at 6%: pension 120 €, income tax 252.56 €, net 1595.44 €.
• 3500 € at 6%: pension 210 €, net 2676.52 € (2785.72 € at 2%).

From net to gross: when you know what you want to take home

A common mistake is to simply add the percentages to the target net. The right answer comes from working backwards, because the exemption is a fixed amount and income tax is calculated after the other payments. The salary calculator finds the gross automatically.

With standard settings (700 € exemption, 2% pillar II) a net of 1500 € requires a gross of 1790.07 €, and a net of 2000 € requires 2455.04 €. The employer's cost is 2395.11 € and 3284.84 € a month respectively. That figure is worth knowing when you talk to a recruiter who thinks in budgets.

The same gross salary from 2023 to 2026

Gross pay can stay flat for years while net pay moves with the tax rules. Income tax was 20% in 2023 and 2024 and 22% in 2025. Until 2025 the basic exemption depended on income, and at a 2000 € monthly salary only 72.67 € of it was left. In 2026 income tax is still 22%, but the exemption is 700 € for everyone.

• 2000 € gross in 2023 and 2024: net 1556.93 €.
• 2000 € gross in 2025: net 1519.83 €.
• 2000 € gross in 2026: net 1657.84 €, which is 138.01 € more than in 2025.
• 3500 € gross: 2699.20 € (2023-2024), 2631.72 € (2025), 2785.72 € (2026).
• 1500 € gross: 1244.00 € (2023-2024), 1223.80 € (2025), 1281.88 € (2026).

Why do contracts always state the gross?

The net depends on your personal settings: whether the exemption application is filed, your pillar II rate, pension age. Two people with the same gross can have nets tens of euros apart. So negotiate in gross and compute your own net.

For example, at 2000 € gross the net is 1657.84 € with a 2% pension contribution, 1595.44 € at 6%, and 1503.84 € without an exemption application. The employer pays the same 2676 € in all three cases.

Common salary calculation mistakes

Most payslip surprises come from one of these mistakes. Each can be ruled out with the calculator in a minute.

• Calculating income tax on the whole gross without deducting the exemption and other payments.
• Comparing two job offers by net pay without knowing which settings produced those figures.
• Forgetting that the basic exemption applies only after you file an application with the employer.
• Filing the exemption application with two employers at once and owing tax after the year ends.
• Expecting net pay to fall by the full increase in the pension contribution when changing the pillar II rate.
• Working out annual income from net pay when the offer stated a gross figure.

Checklist before a salary negotiation

Before you name your expectations or accept an offer, go through these points. That way you and the employer are talking about the same number.

• Decide on your target net and work out the gross backwards.
• Check your pillar II rate: 2%, 4% or 6%.
• Decide which employer will apply your basic exemption.
• Look at the total employer cost as well: that is the figure the employer weighs in the budget.
• When the first payslip arrives, compare each line with the calculator.

Calculate your salary in any direction

Our salary calculator works in any direction: enter gross, net or employer cost and the other two are computed automatically. Years 2023-2026, every setting adjustable.