The law of the state will also officially constitute the tax reform from next week, as soon as the new reliefs and tax exemptions are published in the Government Gazette incomes.
Tax cuts are now entering the final stretch under tax reform and are expected to increase the incomes of millions of households starting 1.1.26 or much earlier in many cases.
And even before these changes were even voted, the special electronic application taxcalc2025.minfin.gr, which was launched a month ago by the Ministry of National Economy and Finance, received over 530,000 visits from taxpayers, in order to calculate the benefit that each of them or their family members (especially young people, parents with children, employees, professionals and owners) will receive from the changes that will begin to unfold directly in income taxation.
The benefits are compounded in many ways: the new law “Tax Reform for the Demographic and the Middle Class – Support Measures for Society and the Economy” includes permanent tax reductions and tax exemptions of 1.5 billion euros for 2026 but, in addition, significant wage increases in the public sector.
But as the tax measures unfold, the gains from their implementation increase to €2.5 billion on a twelve-month basis, from 2027 and every year thereafter. According to the Minister of National Economy and Finance, Konstantinos Pierrakakis, this is the “biggest tax exemption in the post-colonial era”, at a time when other countries in the EU are discussing new austerity measures and cuts, due to high deficits.
Who benefits the most?
From the new measures voted, all taxpayers will benefit, without exception, even those who until today did not pay any income taxes since, after the nominal salary increases they are expected to receive from 2026 onwards, most of them would cease to be tax-free.
This also concerns employees who are paid the minimum wage, which is projected to increase steadily every year from 880 euros today to 950 in 2027. Immediately, however, more than 4 million taxpayers are expected to see an increase in income, due to a reduction in tax rates by 2 percentage points for incomes from 10,000 to 40,000 euros from 1 January 2026.
Specifically, the rate is reduced from 22% to 20% for incomes of 10,000-20,000 euros, from 28% to 26% for incomes of 20,000-30,000 euros, and from 36% to 34% for incomes of 30,000-40,000 euros. At the same time, a new intermediate rate of 39% is introduced for incomes of 40,000-60,000 euros, while it is maintained at 44% only for very high incomes.
Wage increases with tax cuts
Retirees, civil servants and uniformed officers will be the first to see the benefits of the income tax cuts – as an increase in their net earnings – in the January 2026 payroll, which is prepaid at the end of December.
However, this also depends on the degree of readiness of the payroll liquidators of each institution or service separately, to immediately implement the changes that were voted. In the event that they do not have time until December to complete the payroll settlement with the new data, the net benefit will be attributed to each beneficiary from January onwards. Accordingly and private sector workers will see an indirect increase due to a reduction in the tax withheld from themwith the payroll they will receive at the end of January.
In any case, the overall benefit will be reflected in the income tax statements that will be issued in the spring of 2027. The final additional tax will be significantly reduced compared to this year, especially for self-employed people who are not subject to the monthly withholding proportionally as for employees and pensioners.
Families with children earn up to 7,200 euros
Families with children are the big winners of tax reform with drastic reductions in rates. For the first 20,000 euros of income, the rate is reduced from 22% to 18% for families with one child, in 16% for two children, to 9% for three childrenand is completely zeroed out for families with four or more children.
The arrangement applies to both parents, even if both are employed. The example of a couple with an income of 25,000 euros each is typical: without children they have a benefit of 600 euros per year, with one child 1,200 euros, with two children 1,800 euros, with three children 3,400 euros, and with four children it reaches 7,200 euros per year.
Zero tax for 70,000 young people up to 25 years old
For the first time, a solar criterion is introduced in the income taxation system. Around 260,000 young people under the age of 30 will be exempted entirely or will henceforth pay minimal tax under the new regime, on income they earn from 1.1.2026 onwards.
Specifically, approx 70,000 young people up to 25 years old and with incomes up to 20,000 euros they will be fully exempt from income tax (zero tax), while until now they are taxed at rates of 9% and 22%.
Additional, for young people over 25 and up to 30 years old, the rate is limited to 9% for the first 20,000 euros. They will not be taxed at 22% for the amount that exceeds 10,000 and up to 20,000 euros, as is currently the case.
For example, a 24-year-old with an annual income of 15,000 euros who currently pays 2,000 euros in taxfrom January 1, 2026 he will pay nothing and thus save 167 euros per month, an amount that will automatically appear in his salary due to a reduction in the withholding carried out every month in his payroll.
New rate of 25% on rents
Property owners with annual rents of 12,000-24,000 euros will now be taxed at a reduced rate of 25% instead of 35%, which from 1.1.2026 will only apply to the immediately higher bracket.
This reduction aims to support thousands of owners and the financial staff believe that it will limit tax evasion, but also make it more attractive to rent more houses that until now remained – or were declared – as “vacant”. The measure is also combined with the return of one rent per year, which will be received by 80% of the tenants – starting this year and every November on a permanent basis.
Immediately after the passing of the law, the income tax exemption for three years is put into effect, for long-term housing leases that were closed for at least three years, with special provision for large families and public officials who serve in the region. The measure will take effect in a new form in 2026, as well as the suspension of VAT on new buildings is extended by one year, until 31.12.2026.
Reductions in Evidence
About half a million taxpayers will also directly benefit from the 30%-35% reduction in living allowances for homes and cars.
Presumptions for vehicles registered after 2010 will now be calculated based on pollutants. An important innovation is the exception of dependent children who have their own income from the minimum presumption of 3,000 euros, a measure which alone benefits 477,000 taxpayers. From now on, objective expenses for dependent children will not be counted.
All citizens will see a 30% reduction in the presumption for the property they live in. All these reductions are applied retroactively to income earned or to be earned within 2025 and will be reflected as relief in the next tax statements issued in the spring of 2026.
Aid to professionals
Especially for freelancers, relief is provided in three ways:
- zero or reduced income tax (i.e. indirect tax-free) will apply from 1.1.2026 for young people up to 30 years of age who are self-employed, as well as for those who have children. Practically speaking, thousands of self-employed professionals will no longer pay tax “from the first euro” for the income they acquire from 1.1.2026 onwards.
- around 6,000 new self-employed mothers each year will earn their exemption from presumptive income in the year of child birth and in the following two years. The measure aims to support new parents.
- the reduction of the minimum amount of net income for businesses is also extended to municipal communities or settlements of up to 1,500 inhabitants, as well as to operators of school canteens.
Extension of incentives for electronic payments
Furthermore, in 2026, all taxpayers continue to earn a deduction 30% on the expenses they make electronically up to 5,000 euros per year for transactions with specific professionals. This can translate into a tax relief of up to 3,200 euros, for the most consistent.
Also, expenses for medical, dental and veterinary services will be counted double at the minimum spending limit of 30% by electronic means, strengthening the limitation of tax evasion, in the statements that will be issued until the spring of 2027.
In the same law, special tax reliefs for NHS doctors have also been incorporated, as well as direct salary increases for executives serving in the Security Forces, the Armed Forces, the Ministry of Foreign Affairs, as well as for thousands of civil servants with a five-year degree (Polytechnics, etc.). In addition, for the first time, the seniority and research work of researchers is fully recognized, even when offered through project contracts.
Who don’t win
The new provisions will not directly benefit those who declare incomes below 10,000 euros, since they remain virtually tax-free as they are today.
They will not have a practical benefit, however, and those property owners who obtain rental income below 12,000 euros per year. However, there are also many who declare less than what they earn for reasons of tax avoidance, or keep closed apartments instead of renting them out. In the financial staff, they estimate that with the reliefs, more people will have an interest in making houses available for rent, or declaring the actual rent, relieving tenants who will thus receive a larger rent return.
In any case, those still excluded from the benefits of income tax reform will likely have side benefits from other new 2025 measures that will first come into effect from November this year onwards.
Such measures are the return of rent or the permanent annual allowance of 250 euros for low pensioners. which have already been announced and are in effect, but also the drastic reductions or exemptions in VAT and VAT, which will apply from 1.1.2026 in Aegean islands and 12,000 settlements of mainland Greece with a population of less than 1,700 inhabitants.