MPs can currently claim up to 30 percent of their official salaries back in work-related expenses, but this will drop to 25 percent.

Approximately €400,000 will be saved under the measure, Chairman of the Riigikogu Lauri Hussar (Eesti 200) claimed.

The agreement was made by coalition parties Eesti 200, Reform and SDE, and opposition party EKRE. Center and Isamaa did not support the change.

Hussar said the Riigkogu must act in solidarity with the rest of society during a period of austerity.

"The last time expenses were cut was in 2009, and I think it is a great achievement that on such a difficult issue as expenses for members of Parliament, the four political groups were able to find a consensus," he said.

The law enters into force on January 1, 2025.

Lauri Laats, leader of the Center Party faction, believes the agreement is pure populism as the savings will be relatively small. He said noticeable savings would come from tying members' salaries to meaningful work contributions.

Isamaa's Riina Solman said the party is willing to reduce expense allowances but also stands for the interests of MPs from further afield.

The government has set out to make savings for the next three years to reduce the deficit.

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