As of 1 August 2026, the Lithuanian parliament adopted a commentary on the 20th article of the Personal Income Tax Law, clarifying the treatment of certain deductions and introducing a new tax relief for low‑income earners. The commentary specifies that certain social security contributions will be fully deductible, and introduces a threshold of 12,000 EUR for taxable income, above which the tax rate increases progressively. It also defines new categories of eligible expenses for deductions, such as education and healthcare, with a maximum cap of 5,000 EUR per year. The commentary becomes effective on 1 January 2027. Business impact includes the need for updated tax calculations, potential adjustments to payroll processing, and the requirement to re‑evaluate eligibility for existing deduction claims. Taxpayers are advised to review their 2026 filings to ensure compliance with the new thresholds and to consult tax advisors for scenarios involving multiple deduction categories, as total deductible expenses are capped at the statutory limit.
Key Takeaways
- Effective Date: 1 January 2027.
- Deduction Thresholds: Introduction of a 12,000 EUR tax‑free allowance and capped deductible expenses at 5,000 EUR annually.
- Impact on Taxpayers: Potentially lower taxable income for qualifying individuals, requiring updated tax calculations.
Source: Read Original Announcement