Estonia Income Tax Calculator 2026 — 22% Flat + e-Residency

Estonia has a flat 22% personal income tax (PIT) rate in 2026, raised from 20% in 2025. A tax-free personal allowance (basic exemption) of €7,848 per year applies, but this phases out between €14,400 and €25,200 of annual gross income — the allowance is fully eliminated for income above €25,200.

The basic exemption of €7,848 decreases linearly once annual income exceeds €14,400. For every euro earned above €14,400, the exemption shrinks. At €25,200 and above, the exemption is zero. This creates a marginal tax "bump" in the €14,400–€25,200 range where the effective marginal rate exceeds 22%, making careful income planning worthwhile in that band.

Yes. This is Estonia's most distinctive feature. Corporate profits are taxed at 0% as long as they remain in the company (retained earnings). The 22% corporate income tax only applies when profits are distributed as dividends or equivalents. This encourages reinvestment and is a major attraction for tech startups and e-Residents. Dividends to shareholders are not additionally taxed at the personal level if corporate tax has been paid.

Estonian social tax (33%) is entirely paid by the employer — it is not deducted from the employee's gross wage. The employee also pays unemployment insurance at 1.6% and the employer pays an additional 0.8%. For pension Pillar 2 participants: the employee contributes 2% of gross, and 4% of social tax is redirected to their Pillar 2 pension fund. This means net employer cost is gross × (1 + 33% + 0.8%) = gross × 133.8%.

Estonian e-Residency is a digital identity allowing non-residents to establish and run an EU-based company. It does NOT make you an Estonian tax resident. An e-Resident running an OÜ (private limited company) pays 0% on retained profits; only actual distributions trigger 22% corporate tax. The e-Resident still pays tax in their own country of residence. e-Residency is primarily a business administration tool, not a tax tool — but the unique distribution-only taxation is a genuine benefit.