Three-tier progressive income tax (20%/25%/32%) tied to the average wage
Effective 1 Jan 2026
From 1 January 2026 employment income is taxed progressively: 20% on combined annual income up to 36 times the average monthly salary (VDU, preliminarily approx. EUR 82,962), 25% between 36 and 60 VDU (approx. EUR 82,962 to EUR 138,270), and 32% above 60 VDU.
For the employer
- Load the 2026 three-tier withholding rates and VDU-based thresholds into payroll software.
For the employee
- Higher earners now pass through a new 25% middle band before reaching the 32% rate.
Thresholds are indexed to the VDU and move annually.
Source: KPMG Lithuania - Changes in taxation of personal income as of 2026 · Last verified 1 October 2026