Changes to tax and minimum wage in 2025

Vienotais Konts
Vienotais Konts
Vienotais Konts

In 2025, significant amendments will come into effect in Latvia, affecting tax calculations, the minimum wage amount, and the application of the non-taxable minimum. Here are the key changes:

1. Fixed non-taxable minimum: 510 euros per month

From now on, the fixed non-taxable minimum will be 510 euros per month, regardless of the employee's income level. This means simpler tax calculations and a more predictable income structure.

2. Increase in the minimum wage

The minimum wage will rise from the current 700 euros to 740 euros per month. This change will increase the income of employees receiving the minimum wage and will also affect the costs for employers, such as social contributions.

3. Significant increase in the non-taxable minimum for pensioners

The non-taxable minimum for pensioners' income will be significantly increased from 500 euros to 1000 euros per month. This change will substantially reduce the tax burden on pensioners with average and higher incomes.

4. Changes to the income tax (IIN)

  • 25.5% flat rate on income up to 105,300 euros per year. This rate applies to income up to 8775 euros per month, simplifying the system and reducing the tax burden compared to a progressive rate.

  • Solidarity tax 33% will still apply to income exceeding 8775 euros per month.

5. Additional 3% tax on high incomes

An additional 3% tax will be applied to income exceeding 200,000 euros per year (including dividends and capital gains). This change targets high-income groups and increases the tax on capital gains.

What do these changes mean for entrepreneurs and employees?

  • Employers must take into account higher costs associated with the increase in the minimum wage and adjust their pay systems to comply with the new IIN rates.

  • Higher income earners will have to account for a greater tax burden.

  • Pensioners and minimum wage earners will benefit financially from a larger non-taxable minimum and a higher minimum wage.

It is important to review these changes in a timely manner to plan personal or business budgets according to the new requirements. Need help with the adaptation process? Vienotais Konts will provide professional advice and help you understand these changes in your financial context!

In 2025, significant amendments will come into effect in Latvia, affecting tax calculations, the minimum wage amount, and the application of the non-taxable minimum. Here are the key changes:

1. Fixed non-taxable minimum: 510 euros per month

From now on, the fixed non-taxable minimum will be 510 euros per month, regardless of the employee's income level. This means simpler tax calculations and a more predictable income structure.

2. Increase in the minimum wage

The minimum wage will rise from the current 700 euros to 740 euros per month. This change will increase the income of employees receiving the minimum wage and will also affect the costs for employers, such as social contributions.

3. Significant increase in the non-taxable minimum for pensioners

The non-taxable minimum for pensioners' income will be significantly increased from 500 euros to 1000 euros per month. This change will substantially reduce the tax burden on pensioners with average and higher incomes.

4. Changes to the income tax (IIN)

  • 25.5% flat rate on income up to 105,300 euros per year. This rate applies to income up to 8775 euros per month, simplifying the system and reducing the tax burden compared to a progressive rate.

  • Solidarity tax 33% will still apply to income exceeding 8775 euros per month.

5. Additional 3% tax on high incomes

An additional 3% tax will be applied to income exceeding 200,000 euros per year (including dividends and capital gains). This change targets high-income groups and increases the tax on capital gains.

What do these changes mean for entrepreneurs and employees?

  • Employers must take into account higher costs associated with the increase in the minimum wage and adjust their pay systems to comply with the new IIN rates.

  • Higher income earners will have to account for a greater tax burden.

  • Pensioners and minimum wage earners will benefit financially from a larger non-taxable minimum and a higher minimum wage.

It is important to review these changes in a timely manner to plan personal or business budgets according to the new requirements. Need help with the adaptation process? Vienotais Konts will provide professional advice and help you understand these changes in your financial context!