What Changed in Estonia for 2026
Two changes shape 2026 pay. First, the tax hump is gone: everyone now gets a basic exemption of €700 a month, €8,400 a year, whatever they earn. Before, the exemption shrank above €14,400 a year and disappeared at €25,200.
Second, the planned rise of the income tax rate to 24% was cancelled, so the rate stays at 22%. Together they mean that anyone earning more than €1,200 a month keeps more of the same salary than in 2025.
Employee Deductions on an Estonian Payslip
| Deduction | Rate | On 2,100 euros a month |
|---|---|---|
| Unemployment insurance (töötuskindlustus) | 1.6% | €33.60 |
| Funded pension, II pillar | 0%, 2%, 4% or 6% | €42 at 2% |
| Income tax (tulumaks) | 22% | €291.37 |
Income tax is charged after the two contributions and the basic exemption are taken off. The employer pays 33% social tax and 0.8% unemployment insurance on top of gross pay; neither touches your net salary.
Worked Example on 2,100 Euros a Month
- Yearly gross: €25,200
- Unemployment insurance: 1.6% = €403.20
- II pillar pension at 2%: €504
- Taxable income: €25,200 − €403.20 − €504 − €8,400 = €15,892.80
- Income tax: €15,892.80 × 22% = €3,496.42
- Net pay: €20,796.38 a year, €1,733.03 a month
The total share withheld is 17.5%. Skipping the pension would raise net pay to €1,765.79 a month; 6% would lower it to €1,667.51.
Estonian Net Salary at Six Pay Levels
| Gross a year | Gross a month | Income tax | Net a year | Net a month |
|---|---|---|---|---|
| €12,000 | €1,000 | €696.96 | €10,871.04 | €905.92 |
| €18,000 | €1,500 | €1,969.44 | €15,382.56 | €1,281.88 |
| €25,200 | €2,100 | €3,496.42 | €20,796.38 | €1,733.03 |
| €36,000 | €3,000 | €5,786.88 | €28,917.12 | €2,409.76 |
| €48,000 | €4,000 | €8,331.84 | €37,940.16 | €3,161.68 |
| €72,000 | €6,000 | €13,421.76 | €55,986.24 | €4,665.52 |
All rows use the 2% pension rate. Because the exemption is a fixed amount, the share withheld rises slowly with pay but never passes about 24.8%.
Choosing Your II Pillar Rate
The funded pension takes 2% of gross by default, and the state adds 4% from the social tax your employer pays. You can apply to raise your own share to 4% or 6%, or stop it. A new rate takes effect on 1 January, 1 May or 1 September. Your contribution lowers income tax, so 2% of gross costs you about 1.56% of gross in lost net pay. On €2,100 a month the difference between 0% and 6% is €98.28 a month of take home pay.
Taxed Pay, Fringe Benefits and Exemptions
- Taxed as salary: wages, overtime, holiday pay, bonuses and sick pay from the employer.
- Taxed at the employer: fringe benefits such as a company car are taxed in the company with income and social tax, not on your payslip.
- Tax free: health promotion costs up to the yearly limit and daily allowances on business trips at the official rates.
Monthly Payslips, Holiday Pay and Bonuses
Estonian salaries are paid monthly, and the employer applies €700 of basic exemption to each payment once you submit an application to that employer. A steady €2,100 a month therefore gives the same €1,733.03 every month. Without that application no exemption is used, and the full 22% is withheld until you claim the difference back on your annual return.
Holiday pay is worked out from your average pay and taxed like salary. A one off bonus is also taxed at 22% after the contributions, with no extra rate, because Estonia has a single flat income tax. If two employers both apply the exemption, the excess is collected when you file your annual return in spring, so claim it at one job only.
Assumptions and Sources for Estonia
- Resident employee for all of 2026, one employer, below pension age; the full basic exemption is claimed at this job.
- No other income and no deductions such as training costs or housing loan interest.
- II pillar at the rate you choose; employer costs are not shown.
Sources: Estonian Tax and Customs Board pages on tax rates, the basic exemption and unemployment insurance premiums. Rates for 2026. For other Baltic pay see the Latvia Gross to Net Calculator and the Lithuania Gross to Net Calculator.
Frequently Asked Questions
What is the income tax rate in Estonia in 2026?
22%. The increase to 24% that was planned for 2026 was cancelled.
How much is the basic exemption in 2026?
€700 a month, €8,400 a year, for all incomes.
How much is 2,100 euros gross after tax in Estonia?
€1,733.03 a month with the 2% pension contribution.
What is the unemployment insurance rate for employees?
1.6% of gross pay; the employer pays a further 0.8%.
Can I opt out of the II pillar?
Yes. Set the pension field to 0% to see your net pay without it.
Does my employer pay social tax?
Yes, 33% of gross pay on top of salary. It funds health care and the state pension and is not deducted from you.
Can two employers both use my basic exemption?
You can split it, but the total for the year is €8,400. Any excess used is collected through your annual income tax return.