Prime Minister Kaja Kallas (Reform Party) said at a government press conference that the Reform Party previously came up with the idea of reducing the non-taxable minimum income tax, but it did not receive support from government partners, writes ERR. /nginx/o/2024/07/04/16199757t1h8c58.jpg)
Flags of parties of government coalition members. Photo: Madis Veltman
Prime Minister Kaja Kallas (Reform Party) said at a government press conference that the Reform Party previously came up with the idea of reducing the non-taxable minimum income tax, but it did not receive support from government partners, writes ERR.
“As for the topic of a non-taxable minimum income tax, we did not discuss it at all,” said Foreign Minister Margus Tsahkna (Eesti 200). He added that the government should look at how the least advantaged people can cope with the situation.
Currently, the minimum income tax-free is 654 euros, for people of retirement age – 776 euros per month. At the press conference it was not said to what level the Reform Party wants to reduce the non-taxable minimum income tax. Postimees has addressed the relevant question to the political parties, and when responses are received, we will publish them here.
From the new year, income tax will also increase from 20% to 22%. However, under the Reform Party plan, the hitherto progressive income tax (the so-called “tax hump”) would disappear and all employees would be subject to the same level of tax-free income.
Interior Minister Lauri Läänemets (Social Democratic Party) said that reducing the non-taxable minimum presupposes a tax hump.
“When we discussed lifting the tax hump, this was part of it. In connection with the abolition, it was planned, firstly, to increase the minimum wage, and secondly, to increase the tax-free minimum income. This proposal means we will go back over the tax hump.”
How people's salaries will be formed in the new year according to currently known proposals can be seen on the Postimees tax calculator . Currently, a person with the minimum wage who has the second pillar of a funded pension receives 763.18 euros per month; after the New Year's reform of the so-called tax hump and an increase in income tax, he will receive 770.6 euros. If the tax-free minimum did not exist, a person earning the minimum wage would only receive about 608 euros in the new year at the new income tax rate of 22 percent, meaning he would lose up to 20 percent of his net salary.
