Major 2026 changes: Slovakia ended 19% flat tax (now 19-35% progressive), Lithuania added 25% middle bracket, Portugal NHR expired for new applicants, US TCJA made permanent by the One Big Beautiful Bill Act (OBBBA, signed July 4, 2025) — 37% top rate stays, standard deduction permanent, estate raised to $15M. UAE introduced 9% corporate tax. These reforms affect millions of expats and digital nomads.
At a glance
Key Facts
Biggest Change
Slovakia ended flat tax after 22 years (now 19-35%)
US Alert
TCJA made permanent by OBBBA (signed July 4, 2025): 37% top rate stays, estate raised to $15M, SALT cap raised to ~$40,400 through 2029
Europe Trend
Eastern Europe moving away from flat taxes
Expat Impact
Portugal NHR closed, Spain Beckham Law continues
Corporate
UAE 9% tax, global minimum tax implementation
Introduction
Tax systems never stand still. 2026 brought significant reforms across multiple countries, from Eastern European flat tax reversals to the sunset of US tax provisions. These changes affect expats, digital nomads, and anyone planning international moves.
This guide summarizes the most important 2026 tax reforms and their practical implications.
Section 01
Slovakia: The Flat Tax Era Ends
What Changed
Slovakia's famous 19% flat tax, in place since 2004, ended with the 2026 "Consolidation Package":
Old System (2004-2025)
19% flat tax on all income
Simple, predictable, investor-friendly
Poster child for flat tax movement
New System (2026)
19%: Income up to €47,537
25%: €47,537 to €92,046
30%: €92,046 to €176,000
35%: Above €176,000
Impact
Income
Old Tax
New Tax
Increase
€50,000
€9,500
€9,630
+€130
€100,000
€19,000
€21,100
+€2,100
€150,000
€28,500
€35,800
+€7,300
€200,000
€38,000
€52,300
+€14,300
Why It Happened
Budget deficit pressures
EU fiscal rule compliance
Political shift (new government priorities)
Inequality concerns
Section 02
Lithuania: New Middle Bracket
What Changed
Lithuania reformed its tax brackets for 2026:
Old System (2023-2025)
20% up to €84,528
27% above €84,528
New System (2026)
20%: Up to €60,000
25%: €60,000 to €90,000
32%: Above €90,000
Impact
Middle earners (€60-84K) now pay more
High earners (€90K+) see increase from 27% to 32%
Lower earners unaffected
Why It Matters
Lithuania was one of the Baltic success stories with simple taxation. This reform adds complexity and increases burden on professionals—the people most mobile internationally. Combined with Slovakia's change, signals broader Eastern European retreat from flat taxes.
Section 03
Portugal: NHR Finally Closes
What Changed
The Non-Habitual Resident (NHR) program officially closed to new applicants as of January 1, 2024, with transition period ending 2025.
What NHR Offered
20% flat rate on Portuguese employment income
0% on most foreign income (10 years)
Extremely generous for expats and retirees
What Replaced It
IFICI: New regime for highly qualified professionals
20% rate: Still available but more restrictive
Standard taxation: Most new arrivals face 14.5-48%
2026 Impact
New expats face full Portuguese taxation
Existing NHR holders continue until their 10 years expire
Portugal less attractive than Spain (Beckham Law), Italy (Impatriates)
Alternatives
Spain Beckham Law: 24% flat, still available
Italy Impatriates: 50-90% exemption
Greece: 7% flat on foreign income (non-dom)
Cyprus: Various exemptions for new residents
Section 04
United States: OBBBA Prevents TCJA Sunset
What Happened
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made most TCJA provisions permanent — preventing the feared return to pre-2018 tax rates. The 37% top rate stays; it did not revert to 39.6%. Congress acted before the December 31, 2025 deadline.
What OBBBA Preserved or Improved
Item
Pre-TCJA (pre-2018)
TCJA (2018-2025)
OBBBA Result (2026+)
Top rate
39.6%
37%
37% — permanent
Standard deduction (single)
~$6,350
$16,100 (2026)
$16,100 — permanent (indexed)
Standard deduction (married)
~$12,700
$32,200 (2026)
$32,200 — permanent (indexed)
Estate exemption
~$5.5M
$15M
$15M — permanent
Child tax credit
$1,000
$2,000
$2,200 — raised and permanent
SALT deduction cap
Unlimited
$10,000
~$40,400 (2026) — expires 2030
QBI 20% deduction
None
20% of QBI
20% — permanent
New OBBBA Provisions
Tip income exclusion: Up to $25,000 exempt (through 2028)
Overtime pay exclusion: Up to $12,500 ($25,000 MFJ) exempt (through 2028)
Senior deduction: Extra $6,000 per person age 65+ (through 2028)
Expat Impact
FEIE: Unchanged ($132,900 for 2026)
Foreign tax credit: Still available
Tax rates: Remain at TCJA levels — no rate increase for US citizens abroad
Section 05
UAE: Corporate Tax Implementation
What Changed
UAE introduced corporate tax for the first time:
0%: On income up to AED 375,000 (~$102,000)
9%: On income above AED 375,000
Effective: Financial years starting June 1, 2023 onwards
What Didn't Change
Personal income tax: Still 0%
Employment income: Still 0%
Freelancer income: Still 0% (individual, not company)
Impact on Digital Nomads
Operating as individual: No tax change
Operating through UAE company: 9% above threshold
Freezone companies: May still qualify for 0% with conditions
Why It Happened
Global minimum tax (Pillar 2) compliance
OECD pressure
Revenue diversification
Still competitive vs alternatives
Section 06
Other Notable 2026 Changes
Global Minimum Tax (Pillar 2)
What: 15% minimum corporate tax on large multinationals
Effective: Rolling out 2024-2026
Impact: Tax havens less effective for big companies
Not affected: Individuals, small businesses
Hungary: Maintains Flat Tax
Income tax: Still 15% flat
Family benefits: Still up to 40% reduction
Signal: Not all of Eastern Europe abandoning flat taxes
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Slovakia faced budget deficits requiring consolidation measures. The EU's fiscal rules demanded action. Adding progressive brackets on high earners was politically easier than raising rates on everyone. The new government also had different ideological priorities than the 2004 reformers who introduced the flat tax.
Q
Is Portugal still good for expats after NHR ended?
Less attractive than before. New arrivals face 14.5-48% progressive taxation instead of NHR's 20% flat/0% foreign. The IFICI regime offers some benefits for highly qualified professionals but is more restrictive. Spain (Beckham Law) and Italy (Impatriates) now offer better tax treatment for most expats.
Q
What did OBBBA do to US taxes?
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made most TCJA provisions permanent. The 37% top rate stays — it did not revert to 39.6%. Standard deduction is permanent at $16,100 (single) / $32,200 (married) in 2026, inflation-indexed going forward. Estate exemption raised to $15M per person, permanent. Child tax credit raised to $2,200. SALT cap raised to ~$40,400 for 2026 (expires 2030). New provisions added: tip income exclusion, overtime exclusion, senior deduction (all through 2028).
Q
Does UAE's corporate tax affect digital nomads?
Usually not. The 9% corporate tax applies to businesses, not individuals. Freelancers operating as individuals still pay 0% income tax. If you operate through a UAE company, you'd pay 9% above AED 375,000. Most digital nomads operating personally are unaffected.
Q
Which flat tax countries are still safe?
Hungary (15%) and Georgia (20% or 1% SBS) appear most committed. Bulgaria and Romania (both 10%) haven't shown signs of changing. Estonia (22%) is stable. However, Slovakia's exit after 22 years shows nothing is guaranteed. Territorial tax countries (Panama, Costa Rica) may be more stable long-term.
Disclaimer:Tax reforms are subject to change through legislative amendments, regulations, and court decisions. This guide reflects information available as of April 2026. Always verify current rules with official sources and consult tax professionals before making decisions based on tax law.