Basic Exemption 2026 in Estonia: €700 for Everyone — What Changed?

In 2026, Estonia changed how the general basic exemption works: it is up to €700 per month, or €8,400 per year, and no longer decreases as income rises. At pensionable age, a separate ceiling applies: €776 per month, or €9,312 per year.

This matters for both employees and employers because the basic exemption directly affects take-home pay. To see the impact on a specific salary, use the salary calculator for Estonia 2026 and adjust the basic exemption field manually.

What was the old system?

Under the previous system, the general basic exemption depended on the person’s annual income. As income increased, the exemption decreased. In practice, some employees had to pay additional income tax after filing the annual tax return if too much exemption had been applied during the year.

That made payroll and personal cash planning less predictable. The same gross salary did not always produce an easy-to-forecast net salary when the person’s other income changed.

What changed in 2026?

From 2026, the general basic exemption no longer depends on income level. The ceiling is €700 per month, but the employer applies only the amount stated in the employee’s written application.

In practical terms:

• the employee can choose up to €700 per month in the application;
• if another payer already applies the exemption, the full monthly amount cannot be duplicated;
• if the employee wants a conservative calculation, they can choose a lower amount or €0.

At pensionable age, a separate basic exemption rule applies. According to EMTA, the 2026 ceiling is €776 per month.

Who benefits?

The clearest change is for employees whose exemption was reduced under the old income-dependent system. From 2026, that reduction no longer applies. Net salary becomes easier to forecast, especially when the person has one employer and has submitted a correct application.

For employers, communication with employees becomes simpler, but the application still matters. Payroll cannot apply the exemption arbitrarily — it needs the employee’s instruction.

How do you submit the application?

The employee must tell the employer or payer how much basic exemption to apply. In practice, this is done with a written application. If the situation changes — for example, a second employer or other regular income appears — the application should be reviewed.

If the company has several employees, a clean process helps avoid TSD corrections and questions about net salary. See our payroll services in Estonia if you want applications, payslips and TSD reporting handled correctly every month.

Sources: Estonian Tax and Customs Board, 2026 tax rates and calculation of basic exemption.