# Tax-Free Income in Estonia - Exemptions and Thresholds

Tax-free income is the tax-exempt portion of income on which income tax does not have to be paid. Separate tax-free income applies to people who are not of retirement age and to people who are of retirement age or reach retirement age during the year.

## Change from 2026

From **2026 onwards**, the so-called tax threshold will disappear and all employees will have an equal **700 euros per month** (8400 euros per year) income tax exemption. Tax-free income will no longer depend on a person’s income and will not decrease as income increases.

For people of retirement age, the tax-free income is **776 euros per month** (9312 euros per year).

## Tax-free income 2025 (valid until December 31, 2025)

Tax-free income decreases gradually if the salary is higher:

-   **654 euros and less** → full tax-free income (**654 euros**)
-   **654–2100 euros** → tax-free portion decreases gradually (formula: 654 – 654 ÷ 900 × (gross salary – 1200))
-   **2100 euros and more** → tax-free income is **0 euros** (you pay 22% on the entire salary)

### Tax threshold

## Examples

**Gross salary 600 euros:** No income tax is paid at all and only employee unemployment insurance of 1.6% and funded pension are withheld, if they have joined it.

**Gross salary 1500 euros:** The tax-free portion is smaller, **436 euros** (formula: 654 – 654 ÷ 900 × (1500 – 1200)).

**Gross salary 2500 euros:** There is no tax-free income and income tax must be paid on the entire gross salary, from which employee unemployment insurance of 1.6% and funded pension are withheld, if they have joined it.