Tax Reform Now in Effect — Changes Start at Midnight

As of January 1, 2026, midnight, the new tax reform officially takes effect, following its publication in the Official Gazette of the Republic. Key changes include an increase in tax-free income and higher tax deductions, which citizens will be able to apply when filing their 2026 tax returns in 2027. Tax returns for 2025 will not be affected by the new rules.

 

What Changes in Income Tax from 2026

The reform also brings significant benefits for businesses. While corporate tax rates are increasing, the so-called “deemed distribution” is abolished, and the tax on actual dividends is reduced from 17% to 5%. Additionally, stamp duty is eliminated. Guidance and clarifications on all published changes are expected from the Tax Department and the Ministry of Finance.

 

According to the Presidency and government, the tax reform package approved by the House of Representatives on December 22, 2025, represents a major shift in how the state taxes the income and activities of both citizens and businesses.

 

“This is part of a broader modernization of the state, creating a fairer, simpler, modern, and more competitive tax system. The aim is clear: to support the middle class, increase disposable income, and stimulate economic activity,” the official statement reads.

 

Tax Relief for Families and Businesses

For households, the tax-free income threshold is set at €22,000 per year. Additional tax exemptions are available depending on family composition. For example, a family with two children can benefit from up to €10,000 in extra deductions annually. This translates into a substantial reduction in tax burdens, greater support for the middle class, and higher disposable income. Deductions cover children and students up to 24 years old, mortgage interest or rent payments, and “green” expenses such as energy-efficient home upgrades, solar panel installation, and electric vehicle purchases.

 

For businesses, the elimination of deemed distribution and the reduction of the dividend tax to 5% improves liquidity, simplifies planning, and creates a more attractive environment for investment and growth.

 

Overall, the reform directs benefits where they are created — to households, families, and businesses. Lower taxes mean more financial freedom and opportunities for everyone. With a focus on fairness, sustainable development, and support for the real economy, the government continues to implement policies that genuinely improve citizens’ daily lives and strengthen the country’s competitiveness.

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