Net salary

Net salary is gross salary from which taxes and payments have been withheld by law.

Calculating Net salary in 2025

In 2025, the payments withheld by law are as follows:

• Funded pension (0%, 2%, 4%, or 6%) – according to the employee’s own choice. This can be verified based on the personal identification code

  on the Pension Centre’s website

• Employee unemployment insurance (1.6%)
• Income tax (22%)

Tax-free income

When calculating net salary, the tax-free income is also important – each employee can decide whether they want to use it or not, and if so, to what amount. An application from the person is required to apply tax-free income.

Tax-free income in 2025

Until December 31, 2025, Estonia has different tax-free income limits for those who earn:

• Payment up to 1200 euros – tax-free income is 654 euros
• Payment 1200–2100 euros – tax-free income decreases according to the formula: 654 – 654 ÷ 900 × (gross salary – 1200)
• Payment over 2100 euros – tax-free income is 0 euros

You can read more about tax-free income

here

.

Change from 2026

From 2026 onwards, the so-called tax loophole will disappear and all employees will have an equal 700 EUR income tax exemption, regardless of their income.