2026 tax reform: what changes for your salary
From 1 January 2026, Lithuania restructures how employment income is taxed: a third income-tax bracket appears and the non-taxable amount (NPD) switches to a single formula. Here is what actually changes, with the exact thresholds.
Three GPM brackets instead of two
Through 2025, employment income was taxed at 20% up to 60 average salaries (VDU) per year and 32% above that. From 2026, the 20% bracket is cut at 36 VDU and a new 25% middle bracket covers income between 36 and 60 VDU. The top rate of 32% still starts at 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 for everyone
Through 2025 the non-taxable amount used different formulas by income level, including a separate tier for higher earners. From 2026 a single formula applies (per VMI’s 2025-07-03 circular R-2727): if your monthly gross is at or below the minimum wage (€1,153), the NPD is €747; above that, NPD = €747 − 0.49 × (gross − €1,153).
Under this formula the NPD reaches zero at a monthly gross of €2,677.49 — above that point no non-taxable amount applies.
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
The reform leaves the rest of the payslip untouched:
- 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 plus a 1.5%-of-VDU state contribution
- 3rd pillar pension: contributions up to 25% of annual income keep their tax benefit
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), your GPM rate is unchanged at 20% — for most salaries the visible 2026 differences come from the new NPD formula and the higher MMA/VDU. Higher incomes now pass through the 25% bracket before reaching 32%.
The cleanest way to see your own number is to compare the same salary under both years’ rules — the calculator does exactly that side by side.
Please note that this calculator is universal. To get accurate information about your salary, you should contact your employer or the company’s accounting specialist.