The Lithuanian parliament, Seimas, on Thursday approved changes to the personal income tax law that will introduce three progressive tax rates starting in 2026, along with a reinstated tax break for families beginning in 2027.
Seventy-eight members of the Seimas voted in favour of the amendments, while 46 opposed and none abstained. The changes passed solely with votes from the ruling coalition. Aidas Gedvilas, the only member of the Nemunas Dawn group in opposition, voted against. The entire opposition also voted against the measure.
The revised law will tax annual income at 20%, 25%, or 32%, depending on earnings:
- Income up to 3 times the average annual salary, or approximately €84,000, will be taxed at 20%.
- Income between 3 and 5 times the average salary (up to about €140,200) will be taxed at 25%.
- Income above 5 times the average salary will be taxed at 32%.
A separate tax model will apply to farmers: 15% for income up to three times the average salary, and 20% for higher income.
The cap on tax-exempt employer-paid health insurance premiums will be set at €350 annually. Business groups had proposed raising the limit to €600–€700.
In addition, the Seimas backed a proposal from President Gitanas Nausėda and the Nemunas Dawn group to reintroduce an additional non-taxable income amount (NPD) for families with children starting in 2027. The allowance will total €1,044 per year (€87 per month) for each child.
The changes drew mixed reactions across party lines.
Social Democrat MP Birutė Vėsaitė argued the reform promotes social justice and reduces inequality.
“Those with higher incomes pay more taxes – is that unfair? The people who are better off didn’t walk into a desert. They benefited from infrastructure, education, healthcare – all created by society,” she said during the session.
By contrast, Conservative MP Audrius Petrošius criticised the ruling bloc, calling them “God’s scourge for anyone living slightly better”.
“You’re not creating any tangible benefit – just adding a heavier tax burden on Lithuania’s hardest-working and most productive people,” he said.
Rimas Jonas Jankūnas, a member of the Farmers and Greens Union and the Christian Family Alliance, called the reform a “mess”.
“Everyone speaks against it, yet everyone votes for it,” he remarked.
MP Ignas Vėgėlė of the same opposition group dismissed the family tax credit as symbolic.
Former Prime Minister and Conservative MP Ingrida Šimonytė reminded lawmakers that six years ago, the additional NPD was replaced by direct child benefits, which have since quadrupled, from €30 to €122.50 per month.
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