Lithuania tax rates 2026

The bands apply to the year's total employment income. A monthly tax-free amount lowers the tax on smaller salaries and phases out completely at EUR 2,677.49 a month.

Lithuania applies four tests to decide whether an individual is resident in a tax period. A person is resident with a permanent home in Lithuania, or with a centre of personal, social or economic interests that lies in Lithuania rather than abroad. Presence decides it too: 183 days or more in a tax period, or 280 days or more across two consecutive tax periods with at least 90 days in one of them. Days count whether the stay is continuous or broken.

Leaving does not end residence at once. Someone who has been resident for at least three tax periods in a row and spends fewer than 183 days in Lithuania in the year of departure stays resident until the day of departure rather than for the whole year. The rule stops a mid-year move from turning the entire departure year into a non-resident year.

The tax year is the calendar year. Employers withhold income tax and social insurance from each month's pay. The annual return for 2026 is due before 1 May 2027, and any tax still owing is paid by the same date. The return covers income that no employer has taxed, such as foreign salary, rent, gains on shares and profit from individual activity. Returns go through the electronic declaration system of the State Tax Inspectorate.

Dividends carry a flat 15% tax, withheld by a Lithuanian company when it pays them, and they never move into the progressive scale. Other income that does not come from employment, including interest, rent and gains on shares, pays 15% on the first 12 average monthly wages a year, EUR 27,745.80 in 2026. Income above that line joins the main scale of 20%, 25% and 32%, so a large gain realised in one year can reach the 25% and 32% rates.

Employees pay 19.5% of gross pay to Sodra: 8.72% for pensions, 1.99% for sickness, 1.81% for maternity and 6.98% for compulsory health insurance. Members of the pension accumulation scheme add 3% for their second-pillar fund. The employer pays 1.31% for unemployment insurance, or 2.03% on a fixed-term contract, 0.14% for accident insurance in risk group I, and small contributions to the guarantee fund and the long-term employment fund.

Social insurance stops at an annual ceiling of 60 average monthly wages, the same line at which the 32% income tax rate starts, and the ceiling covers both the employee and the employer share. Contribution rates for 2026 are the same as in 2025 apart from accident insurance for risk group II, which is 0.49% this year.

From 2026 profit from individual activity, the regime for self-employed people working without a company, joins the general progressive scale but keeps a soft start. Taxable profit up to EUR 42,500 a year is taxed at 20% with a tax credit. On profit up to EUR 20,000 the credit is 15%, leaving an effective rate of 5%. The credit then tapers, so the effective rate reaches 15% at EUR 35,000 and 20% at EUR 42,500. Profit above EUR 42,500 is taxed at the basic rates.

Activities under a business certificate pay a fixed amount of income tax set in advance instead of tax on actual profit. From 2026 the fixed amount covers income up to EUR 50,000 a tax period, up from EUR 45,000, and income above that line is taxed at 15%. The same EUR 50,000 line applies to leasing out immovable property. Farmers have a separate scale: 15% with a tax credit up to 60 average monthly wages and 20% above.

The 2026 reform added a third income tax rate. In 2025 employment income paid 20% up to EUR 126,532.80 and 32% above that. From 2026 the 20% band stops at 36 average monthly wages and a 25% band runs from there to 60, so higher salaries pay more on the slice in between. Employer-paid health insurance also became a taxable benefit for the employee where it exceeds EUR 350.

A new Law on Immovable Property Tax took effect on 1 January 2026. Each municipality sets a tax-free value for the main home of at least EUR 450,000 and a rate of 0.1% to 1% on the excess. Where a council made no decision by 1 December 2025, the main home pays 0.1% above EUR 450,000. The main home is the one where the owner has declared residence on the last day of a month.

Two changes for 2027 are already fixed. The minimum monthly wage rises to EUR 1,245 on 1 January 2027, and a new tax-free allowance for parents starts on the same date for employees and the self-employed alike. The euro values of the income tax bands and the Sodra ceiling will move as well, because both follow the average monthly wage set for each year.

There is no investor or expatriate regime. Self-employed individuals face effective rates of 5-20% under EUR 42,500. Business certificates offer fixed-rate treatment up to EUR 50,000.