The tax reform will officially become Law of the State next week, as soon as the new reliefs and tax exemptions are published in the Government Gazette.
Tax cuts are now entering the final stretch and are expected to increase the incomes of millions of households from 1.1.2026 – or much earlier however in many cases.
And even before these changes have been voted, the special electronic application taxcalc2025.minfsofokleous10.gr, which the Ministry of National Economy and Finance put into use a month ago, received more than 530,000 visits from taxpayers, in order to calculate the benefit that each of them individually or their family members (especially young people, parents with children, salaried employees, professionals and owners) gains from the changes that will begin to unfold immediately in income taxation.
The benefits arise in combination in many ways: the new law “Tax reform for demographics and the middle class – Support measures for society and the economy” includes permanent tax reductions and tax exemptions of €1.5 billion for 2026 but, additionally, significant wage increases in the public sector.
As the tax measures unfold, however, the gains from their implementation increase to €2.5 billion on a twelve month basis, from 2027 and every year after. According to the Minister of National Economy and Finance Konstantinos Pierrakakis, it is the “largest tax exemption in --junta era”, at a time moreover when other countries in the EU are discussing new austerity measures and cuts, due to high deficits.
Who benefits most
From the new measures that were voted, all taxpayers without exception will benefit, even those who until now did not pay any income tax at all since, after the nominal increases of earnings they are expected to receive from 2026 onwards, most would stop being tax free.
This also concerns salaried employees who are paid the minimum wage, which is expected to increase steadily every year now from 880 euros today to 950 in 2027. Immediately however, more than 4 million taxpayers are expected to see an increase in income, due to the reduction of tax rates by 2 percentage points for incomes from 10,000 to 40,000 euros from January 1, 2026.
Specifically, the rate is reduced from 22% to 20% for incomes 10,000-20,000 euros, from 28% to 26% for incomes 20,000-30,000 euros, and from 36% to 34% for incomes 30,000-40,000 euros. At the same time, a new intermediate rate of 39% is introduced for incomes 40,000-60,000 euros, while it remains at 44% only for very high incomes.
Wage increases with tax cuts
Pensioners, public employees and uniformed officers will see first the benefits from the income tax reductions — as an increase in their net earnings — in the January 2026 payroll, which they are prepaid at the end of December.
However this also depends on the readiness level of the payroll clearing offices of each institution or service separately, to immediately apply the voted changes. In the event they do not manage by December to complete the payroll clearing with the new data, the net benefit will be given to each beneficiary from January onwards. Accordingly private sector employees will see an indirect increase due to the reduction of the withholding tax, with the payroll they will receive at the end of January.
In any case, the total benefit will be reflected in the income tax clearing notes that will be issued spring 2027. The final additional tax will be significantly reduced compared to this year, especially for freelancers for whom monthly withholding is not performed proportionally like it is for employees and pensioners.
Families with children gain up to 7,200 euros
Families with children are the big winners of the tax reform with drastic reductions in the rates. For the first 20,000 euros of income, the rate is reduced from 22% to 18% for families with one child, to 16% for two children, to 9% for three children, and is zeroed completely for families with four or more children.
The provision applies to both parents, if both are working. A characteristic example is a couple with 25,000 euros income each: without children they have benefit of 600 euros per year, with one child 1,200 euros, with two children 1,800 euros, with three children 3,400 euros, and with four children it reaches 7,200 euros per year.
Zero tax for 70,000 young people up to 25 years old
For the first time an age criterion is introduced in the income taxation system. Approximately 260,000 young people up to 30 years old will be completely exempt or will now pay minimal tax from the new regime, for the incomes acquired from 1.1.2026 onwards.
Specifically, about 70,000 young people up to 25 years old with incomes up to 20,000 euros will be fully exempt from income tax (zero tax) while until today they are taxed with rates of 9% and 22%.
Additionally, for young people over 25 and up to 30, the rate is limited to 9% for the first 20,000 euros. They will not be taxed with 22% for the amount exceeding 10,000 and up to 20,000 euros, as currently applies.
Indicatively, a 24-year-old with annual income of 15,000 euros who today pays 2,000 euros tax, from January 1, 2026 will pay nothing and thus saves 167 euros monthly, amount which will appear automatically in his salary due to reduction in withholding that is performed every month in his payroll.
New 25% rate on rents
Property owners with annual rents 12,000-24,000 euros will now be taxed with reduced rate 25% instead of 35% which from 1.1.2026 will apply only to the immediately higher bracket.
This reduction aims to support thousands of owners and the economic staff estimate that it will limit tax evasion, while also making more attractive the renting of more homes that until today remained — or were declared — as “empty”. The measure is also combined with the return of one rent per year, which will henceforth be received by 80% of tenants — from this year and every November on a permanent basis.
Immediately from the voting of the law income tax exemption for three years is also implemented, for long term rentals of homes that remained closed for at least three years, with special provision for large families and public servants serving in the regions. The measure will also apply in new form in 2026, as well as the suspension of VAT on new buildings is extended by one year, until 31.12.2026.
Reductions in Imputed Income
About half a million taxpayers will immediately benefit also from the reduction by 30%-35% of imputed living expenses for homes and cars.
The imputed income for vehicles registered after 2010 will now be calculated based on emissions. A significant innovation is the exemption of dependent children who have their own income, from the minimum imputed income of 3,000 euros, a measure which alone benefits 477,000 taxpayers. Henceforth, objective expenses for dependent children will not be counted.
All citizens will see a 30% reduction also in the imputed income for the property they reside in. All these reductions apply retroactively for incomes acquired or to be acquired within 2025 and will be shown as relief in the upcoming tax clearings that will be issued spring 2026.
Support for professionals
Specifically for freelancers, reliefs are provided in three ways:
- zero or reduced income tax (meaning indirect tax-free) will apply from 1.1.2026 also for young people up to 30 years old who practice a freelance profession, but also for those who have children. Essentially thousands of freelancers will no longer pay tax “from the first euro” for the incomes they acquire from 1.1.2026 onwards.
- about 6,000 new mothers freelancers each year will gain exemption from imputed income for the year of birth of child and the next two years. The measure aims to support new parents.
- the reduction of the minimum amount of net income for businesses, is extended also to municipal communities or settlements up to 1,500 inhabitants, as well as for operators of school canteens.
Extension of incentives for electronic payments
Additionally and in 2026, all taxpayers continue to earn discount of 30% on expenses they make electronically up to 5,000 euros annually for transactions with specific professionals. This can translate to tax relief up to 3,200 euros, for the most consistent.
Also, expenses for medical, dental and veterinary services will be counted double in the minimum 30% expense threshold with electronic means, strengthening the restriction of tax evasion, in the tax clearings that will be issued until spring 2027.
In the same law special tax reliefs have also been incorporated for National Health System doctors, but also immediate wage increases for staff serving in the Security Forces, the Armed Forces, the Ministry of Foreign Affairs, as well as for thousands of public employees with five-year degree (Polytechnic etc). Additionally, for the first time the previous service and research work of researchers is fully recognized, even when offered with project contracts.
Who does not gain
From the new provisions those who declare incomes below 10,000 euros will not have direct benefit, since they remain essentially tax-free as today.
They will not have practical benefit, however, also those property owners who acquire incomes from rents below 12,000 euros per year. However in this category there are also many who declare less than what they actually make for reasons of tax avoidance, or keep apartments closed instead of renting them. The economic staff estimate that with the reliefs, more will have interest to make homes available for rent, or to declare the real rent, relieving tenants who will thus receive greater rent return.
In any case, even those excluded from the benefits of income tax reform will likely have side benefits from other new measures of 2025 that for the first time will be implemented from November this year onwards.
Such measures are the rent return or the permanent annual allowance of 250 euros for low pensioners. which have already been announced and are in effect, but also the drastic reductions or exemptions in ENFIA and VAT, which will apply from 1.1.2026 on Aegean islands and 12,000 settlements of mainland Greece with population below 1,700 habitants.
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