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Income tax in Lithuania 2026
From 2026 employment income climbs three steps — 20%, 25% above 36 average wages (EUR 83,237) and 32% above 60 (EUR 138,729) — softening the old cliff from 20% straight to 32%.
Most income aggregates into the 20/25/32% scale from 2026 — but qualifying non-employment income (interest, rents, gains and similar) keeps a 15% rate up to 12 average wages a year (EUR 27,745.80), with only the excess joining the scale; dividends stay at 15% throughout.
At a glance
- top rate
- 32% above EUR 138,729 (2026)
- entry band
- 20%, after an allowance of up to EUR 747 a month
- tax year basis
- Calendar year, cash basis
- filing deadline
- 1 May of the following year; employer withholding covers most salaries
- residency basis
- Worldwide if home in Lithuania, 183+ days in the year, or 280 days over two years
- regime flag
- Business-certificate lump sums up to EUR 50,000 of income; 20% professional-activity rate to EUR 42,500
Rates
Progressive scale (2026)
| Annual income (EUR) | Rate on this band | Note |
|---|---|---|
| 0 – 83,237.40 | 20% | 36 average monthly wages |
| 83,237.40 – 138,729 | 25% | New band for 2026 |
| Over 138,729 | 32% | 60 average monthly wages |
Marginal rates apply within each band.
Flat and special rates (2026)
| Rate | Base | Applies to |
|---|---|---|
| 15% | Gross | Dividends — always flat, never aggregated |
| 15%, then 20–32% | 15% up to 12 average wages (EUR 27,745.80/year) of combined non-employment income; the excess aggregates | Interest, royalties (non-employer), rents, capital gains, gifts and prizes |
| 20% less credit | Net professional income up to EUR 42,500/year | Registered independent professionals — the credit makes small profits nearly tax-free |
| Lump sums | By activity and municipality | Business-certificate trades up to EUR 50,000 of annual income |
| 15% / 20% | Net income | Agricultural activity — 20% above 60 average wages |
Thresholds & allowances
- Basic personal allowanceEUR 747 a month
Full at the EUR 1,153 minimum wage; shrinks by EUR 0.49 per euro above it and disappears at EUR 2,562.49 of monthly pay
- Disability allowancesEUR 1,057 – 1,127 a month
For reduced work capacity and retirement-age special needs
- Pension and life insuranceEUR 1,500 a year
Deduction cap for qualifying premiums (contracts by end-2024, relief runs to 2034); total itemized deductions max 25% of taxable income
- Study costsDeductible
Vocational training, higher-education fees and study-loan principal — usable by a parent or spouse if the student can't
- Health insurance premiumsEUR 350 a year
Employer-paid supplementary health premiums exempt within this new 2026 limit
Residency
Residency trigger
You are resident with a home in Lithuania, 183+ days in the tax year, or 280+ days across two consecutive years (90+ in one of them); leavers who were resident 3 years and stay under 183 days remain taxable until genuine departure.
Non-resident treatment
Non-residents pay Lithuanian tax on local employment, board fees, dividends, interest, royalties, rents and gains on registrable assets — at the same rates as residents, with the basic allowance limited to employment income.
Notes
- The employer withholds at the progressive rates monthly; most employees with only Class A (withheld) income need not file unless claiming deductions.
- The professional-activity credit makes effective rates roughly 5–15% on profits up to EUR 42,500; a 30% no-receipts expense deduction is an alternative to actual costs.
- Registered value-added-tax payers and asset-heavy sole traders can carry business losses forward indefinitely; other individuals get no loss relief.
- Board-member payments and employer royalties are taxed like salary on the progressive scale.
- New residents arriving via the 280-day rule file their first-year return by 31 December of the following year.
- Mariners on European Economic Area (EEA)-registered vessels are exempt on that pay.
FAQ
What are Lithuania's income tax rates in 2026?
20% up to EUR 83,237, 25% to EUR 138,729 and 32% above — the middle band is new, saving around EUR 1,100 a year for a EUR 100,000 earner.
How is passive income taxed?
Qualifying non-employment income — interest, royalties, rents, capital gains — is taxed at 15% up to 12 average wages a year (EUR 27,745.80); only the excess joins the 20/25/32% scale. Dividends stay at a flat 15%, and shares held over 5 years keep 15% without limit.
How much salary is tax-free?
Up to EUR 747 a month at the EUR 1,153 minimum wage, tapering away completely once monthly pay reaches EUR 2,562.49.
Figures: tax year 2026, compiled from public sources. Not tax advice.