Higher Tax-Free Threshold
Increased from €19,500 to €22,000 annually – providing relief for all taxpayers
Private Health Insurance
Tax-deductible up to 2% of gross income (subject to 20% cap)
Family Deductions
Single parents get DOUBLED deductions (family thresholds apply)
Pension Income
Special rates: Foreign pension 5%, Widow's pension 20%. No SI/GHS.
Green & Housing Incentives
Deductions for EV purchases, home loans, rent, and disaster insurance
👤Personal Income Tax Changes
1. Increased Tax-Free Threshold
Before 2026
€19,500
From 2026
€22,000
Extra €2,500 tax-free – savings of up to €500 annually!
2. New 2026 Tax Brackets
3. Tax-Deductible Contributions (20% Cap)
Private health insurance, life insurance, and provident fund contributions are tax-deductible but subject to a combined 20% limit of chargeable income (after Social Insurance and GHS deductions).
Private Health Insurance
Tax-deductible up to 2% of gross income
Max 2% of income
Life Insurance
Premium must be max 7% of insured amount
Subject to 20% cap
Provident Fund
Maximum contribution allowed
Max 10% of income
⚠️ Important: These three deductions combined cannot exceed 20% of your chargeable income (after mandatory Social Insurance and GHS contributions).
4. Family Status & Child Deductions
New annual deductions for dependent children or students up to age 24:
👥 Couple / Family
Two parents (married, civil partnership, or cohabiting). Normal deductions with family income thresholds.
👨👧 Single Parent
✓ DOUBLED deductions + family thresholds
Living with children (μονογονεϊκή οικογένεια)
👤 Single Person
Divorced, children live with ex (μονήρες πρόσωπο). €40,000 threshold.
First Child
€1,000
Second Child
€1,250
Third Child & Each Additional
€1,500
Household Income Limits
- • Up to €100,000 for 1-2 children
- • Up to €150,000 for 3-4 children
- • Up to €200,000 for 5+ children
- • Single parents get DOUBLED deductions
- • Single persons (divorced): €40,000 threshold
5. Housing & Green Incentives
These deductions are NOT subject to the 20% cap and have income thresholds based on family status.
Loan Interest & Rent
Deductions for housing loan interest or rental payments
Up to €2,000/person (€4,000 couples)
Energy & EV Combined
Energy upgrades AND electric vehicle purchases (combined limit)
Up to €1,000/person (€2,000 couples)
6. Natural Disaster Insurance
No Income Threshold
Insurance for natural disasters (any property: primary, vacation, rental)
€500 per person (€1,000 for couples)
✓ No income threshold - Available to all taxpayers regardless of income level. This deduction reduces the base for calculating the 20% aggregate limit.
7. Pension Income - Special Tax Treatment
Important: Pensions NOT Subject to SI & GHS
Pension income is NOT subject to Social Insurance (8.8%) or GeSY (2.65%) contributions, significantly reducing the tax burden for pensioners.
Regular Pension (Cyprus)
Cyprus pension, social security, or retirement income
Normal Tax Rates
Added to other income and taxed at standard progressive rates (0%-35%)
Foreign Pension
Pension from foreign government or employer
5% Special Rate
Only on amount above €5,000
Example: €20,000 pension = €5,000 exempt + €15,000 × 5% = €750 tax
Widow's Pension
Pension received as widow/widower
20% Special Rate
Only on amount above €19,500
Example: €30,000 pension = €19,500 exempt + €10,500 × 20% = €2,100 tax
💡 Tip: Pensioners can choose between special rates or normal progressive rates. The calculator automatically selects the most beneficial option for foreign and widow's pensions.
8. Severance Payments
Severance payments due to employment termination will now have special tax treatment:
Flat Tax Rate
20%
Tax-Free Allowance
€200,000
⚠️New Compliance Requirements
Mandatory Tax Returns
All individuals aged 25 and over will be required to submit annual income tax returns.
Electronic Rent Payments
Rent payments exceeding €500 must be made electronically, starting July 1, 2026.
Ready to Calculate Your 2026 Taxes?
Use our free calculator to see exactly how the 2026 tax reform affects your net salary, with comparisons to the pre-2026 system.
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