
Individuals with gross salaries over 700 thousand lek per month will face a higher income tax rate, which will reach 32%, from the current 23%.
The new fiscal package foresees the establishment of a third tax bracket for high salaries, while for salaries from 200 thousand to 700 thousand lek, tax burden relief is foreseen.
The changes are part of the proposals for the revision of Law No. 29, dated 30.03.2023, "On Income Tax", which aim to change the progressive structure of the employment income tax.
According to the proposal, for the first time, a marginal tax rate of 32% will be imposed on gross salaries over 700 thousand lek per month, corresponding to an annual tax base over 8,040,000 lek, after applying the tax deduction.
The new 32% rate will apply only to the portion of income that exceeds the threshold, not to the entire salary. Currently, income above the first band limit is taxed at a rate of 23%, without a third bracket for higher salaries.
In the accompanying report of the changes, the Ministry of Finance argues that the introduction of the third rate aims to strengthen the progressivity of the tax system, by linking the fiscal burden to the solvency of individuals.
Meanwhile, for salaries lower than 700 thousand lek, tax relief is foreseen, through an increase in the limit of the first tax bracket.
Currently, the 23% rate applies to the portion of gross salary that exceeds 200 thousand lek per month. With the proposed changes, this threshold will be increased to 300 thousand lek, expanding the range of income taxed at the 13% rate.
For gross salaries from 300,001 to 700,000 lek per month, the marginal tax rate will be 23%.
According to the report, this intervention aims to ease the tax burden for the middle class and qualified professionals, while individuals with higher incomes will be subject to a higher tax rate.
With the new formula, the progressive tax on employment income will have three rates, determined according to the annual tax base:
The above limits refer to the annual tax base after the tax deduction provided for in the law, while the monthly thresholds of 300 thousand and 700 thousand lek refer to the gross salary.
The proposals are part of the new fiscal package and must be approved before they can take effect. (Monitor)