Estonian basic exemption 2026: 700 € for everyone
The biggest Estonian tax change of 2026 is simple: the basic exemption is now 700 € per month, 8400 € per year, for everyone regardless of income. The complicated regressive system is history. Here is what it means for your wallet.
Updated: 2026-07-08
What changed?
From 2018 to 2025 a regressive system applied: the exemption shrank as income grew and disappeared entirely at higher salaries. That caused unpleasant surprises in the annual tax return when people earned more than forecast.
From 2026 the exemption is the same for everyone: 700 € per month. For those of old-age pension age it is 776 € per month. A raise or bonus can no longer eat your exemption.
How much does it affect net pay?
A 700 € exemption means no income tax (22%) is charged on your first 700 euros per month - worth up to 154 € per month compared to no exemption at all.
Example: with a 2000 € gross salary, the net is 1657.84 € with the exemption and 1503.84 € without it. The difference is exactly 154 € per month, or 1848 € per year.
The application: one employer at a time
To apply the exemption, file an application with your employer. The critical rule: the application may be active with only one payer at a time. File it with two employers and the exemption is applied twice - you will owe tax with the annual return.
- One job: file the application with that employer.
- Several jobs: file it only with your main employer (usually the highest salary).
- Working and receiving a pension: choose whether the employer or the Social Insurance Board applies it.
What if you do not file it?
Then income tax is withheld from your full gross salary and you overpay during the year. You get the overpayment back next spring with the tax return. Not lost money, but an interest-free loan to the state - better to file the application.
Check your numbers with the calculator
Our basic exemption calculator shows how much income tax is withheld from your salary, and the salary calculator gives the full picture: net pay, all taxes and the total employer cost.