2026 tax reform: what changes for your salary
From 1 January 2026, Lithuania adds a 25% income-tax bracket and replaces the previous non-taxable amount (NPD) tiers with one formula. The thresholds below show where each rule applies.
Three GPM brackets instead of two
Through 2025, the 20% rate applied to annual employment income up to 60 average salaries (VDU), with 32% on the part above it. From 2026, 20% applies to the part up to 36 VDU, 25% to the part from 36 to 60 VDU, and 32% to the part above 60 VDU.
| Rate | Annual income |
|---|---|
| 20% | Up to €126,532.80 |
| 32% | Above €126,532.80 |
| Rate | Annual income |
|---|---|
| 20% | Up to €83,237.40 |
| 25% | €83,237.40 – €138,729.00 |
| 32% | Above €138,729.00 |
One NPD formula from 2026
Different NPD formulas applied at different income levels through 2025, including a separate formula for higher earners. From 2026, VMI circular R-2727 sets one formula. At or below the monthly minimum wage of €1,153, NPD is €747. Above that, NPD = €747 − 0.49 × (gross − €1,153).
NPD reaches zero at a monthly gross salary of €2,677.49. It does not apply above that amount.
Updated reference figures
The official average salary (VDU) used for bracket thresholds and the social-insurance ceiling rises to €2,312.15 (from €2,108.88 in 2025), per the adopted legal act. The minimum monthly wage (MMA) rises to €1,153 (from €1,038).
What stays the same
These rates and rules stay the same:
- Social insurance (VSD): 12.52% of gross, capped at 60 VDU per year
- Health insurance (PSD): 6.98% of gross
- 2nd pillar pension: a voluntary 3% employee contribution. In 2026, the state adds €33.49 per month under the statutory formula
- 3rd pillar pension: qualifying employer-paid contributions up to 25% of annual employment income keep their tax exemption
What it means for your net pay
If your annual taxable income stays below 36 VDU (€83,237.40 in 2026, about €6,936 gross per month), GPM remains 20%. For most salaries, the 2026 difference comes from the NPD formula and higher MMA and VDU. Only the part of income above 36 VDU is affected by the new 25% bracket.
Compare the same salary under the 2025 and 2026 rules to see the change in take-home pay.
Results are estimates. Ask your employer or payroll specialist about your individual situation.
Tax changes that matter to your pay
We’ll explain what changed and tell you when the 2027 calculator is ready.