Lithuania implemented major tax reform in January 2026, transforming its personal income tax from a two-tier 20%/32% structure to a three-tier 20%/25%/32% progressive system. The new middle 25% bracket (€83,237-€138,729) reduces the tax burden on middle-income earners who previously jumped straight from 20% to 32%. Combined with 19.5% mandatory employee social insurance contributions, the total tax burden ranges from 39.5% to 44.5% on the marginal euro (about 39% above €138,729, where the pension and sickness part of social insurance stops). Lithuania's reform aims to enhance tax progressivity while funding national defense and ensuring sustainable budget revenue. Dividends and certain investment income remain taxed separately at a flat 15% rate. Lithuania has no general personal allowance, but offers income-specific tax credits for low earners, families with children, and disabled persons. Vilnius, the capital, has emerged as one of Eastern Europe's fastest-growing tech hubs, hosting unicorns like Vinted and attracting fintech, SaaS, and gaming companies with skilled workforce, EU location, and competitive salaries (though higher taxes than Estonia). Lithuania joined the EU in 2004 and eurozone in 2015. Use our calculator to estimate your Lithuanian net salary under the new 2026 tax brackets.
This hub links to every Lithuania tax guide and calculator on CountryTaxCalc — covering income tax rates, and tools to calculate your take-home pay.
Lithuania's income tax uses Progressive income tax (NEW 2026): 20% up to €83,237, 25% up to €138,729, 32% above. 19.5% employee social contributions. Dividends taxed at flat 15%. Three-tier system enhances progressivity vs old 20%/32% structure.. Use the calculator to estimate your take-home pay after income tax:
| Income | Rate |
|---|---|
| Up to €83,237 annually | 20% |
| €83,237 - €138,729 | 25% (NEW middle bracket) |
| Above €138,729 | 32% |
| Social contributions (employee) | 19.5% |
| Social contributions (employer) | Varies by sector |
| Dividends | 15% flat |
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