Finance minister Keit Pentus-Rosimannus (Reform) has sent a draft bill for approval which would, if it enters into law, boost the income tax-free threshold in Estonia to €654 per month, from next year.
The finance minister said the move was: "An important and necessary step towards improving the livelihoods of lower-wage-earners. As a result, an individual earning up to €1,200 per month would get €370 more, over the course of the year," adding that the average pension, likely to exceed the €700-per-month mark, would also become tax free.
The change would affect around 368,000 people and will lead to nearly €100 million extra cash for that demographic.
The threshold calculation was based on a calendar year's income; those earning up to €14,400 per year would see €7,848 as an income tax-free allowance.
Earners receiving more than that see their income tax-free threshold fall by increments; those earning more than €25,200 per annum will have no income tax-free threshold.
The bill would need to pass a Riigikogu vote before coming into effect.
The current maximum income tax-free threshold is €500 per month.
Editor: Andrew Whyte
Source: Ministry of Finance