Personal Income Tax in Latvia: Rates, Brackets, Deductions

Every employed person in Latvia sees two acronyms on their payslip: IIN and VSAOI. The first — iedzīvotāju ienākuma nodoklis, or personal income tax — takes a percentage of income that varies based on how much you earn. In 2026, the system has two brackets, a progressively declining non-taxable minimum, and a set of deductions that most employees never use because they do not know they exist.

This guide covers the full PIT structure for 2026, with practical examples and actionable deduction strategies.

The Two Brackets

Latvia's PIT system as of 2026:

| Annual income | Monthly equivalent | PIT rate | |---|---|---| | Up to EUR 105,300 | Up to EUR 8,775 | 25.5% | | Above EUR 105,300 | Above EUR 8,775 | 33% |

The 33% rate applies only to the portion exceeding the threshold. If you earn EUR 110,000 annually, the first EUR 105,300 is taxed at 25.5% and only the remaining EUR 4,700 at 33%.

Above EUR 105,300, the solidarity tax also kicks in — replacing standard VSAOI. But that is a separate topic (covered in our solidarity tax article).

The Non-Taxable Minimum: EUR 550/Month (for Some)

The monthly non-taxable minimum in 2026 is EUR 550 — but not everyone gets the full amount. It follows a progressive reduction formula: the higher your income, the lower your non-taxable minimum, until it reaches zero.

How the reduction works:

At minimum wage (EUR 780/month), the full EUR 550 applies. Your taxable income is only EUR 230, and PIT is approximately EUR 59.

At EUR 1,200/month, the non-taxable minimum has decreased to roughly EUR 350. Your taxable income is EUR 850, PIT approximately EUR 217.

At approximately EUR 1,800/month, the non-taxable minimum reaches zero. Your entire income is taxable.

This progressive reduction means the non-taxable minimum primarily benefits lower-income earners. Employees earning EUR 2,000+ per month receive no benefit from it at all.

(Detailed calculations: Tax-Free Minimum 2026.)

Deductions Most People Miss

Latvia's PIT system offers several deductions that reduce your taxable income. Many employees never claim them, leaving money on the table.

Dependent's relief (atvieglojums par apgādājamiem): EUR 250/month per dependent (children under 18, children in full-time education up to 24, disabled family members). A family with two children effectively deducts EUR 500/month from taxable income, saving EUR 127.50/month in PIT at the 25.5% rate. That is EUR 1,530 per year — real money.

You must register dependents with your employer or in your annual declaration. If you have not done this, check immediately.

Justified expenses (attaisnotie izdevumi):

These are personal expenses you can deduct from your annual PIT base:

Medical expenses — dentistry, ophthalmology, surgery, therapy, prescriptions. No cap (as of 2026), but must be documented with receipts.
Education expenses — tuition, professional development, courses. Applies to you, your spouse, and your children.
Life insurance and pension contributions — premiums to licensed Latvian insurers and voluntary pension fund contributions. Combined deduction up to 10% of gross annual income.
Donations — to registered public benefit organizations. Up to 20% of taxable income, not exceeding EUR 600 annually, with additional provisions for qualifying organizations.

How to claim: File an annual income declaration (gada ienākumu deklarācija) by June 1 of the following year. Attach receipts or reference them electronically (many providers report to VID automatically). VID recalculates your PIT and issues a refund for overpayment.

In our experience, employees with families and active healthcare spending can recover EUR 200–1,500 per year through justified expense deductions alone. The filing process takes about 30 minutes through EDS (VID's electronic declaration system).

Self-Employed PIT

Self-employed individuals face the same PIT rates but calculate their base differently:

Start with gross income from economic activity
Subtract business expenses (actual or fixed-percentage deduction)
Apply the non-taxable minimum (if not used elsewhere)
Calculate PIT on the resulting net income

The critical difference: self-employed persons also pay VSAOI at 31.07%, which employees and employers split at 10.50% + 23.59%. The combined burden for self-employed individuals is significantly higher.

(See SIA vs IK vs Self-Employed for a full comparison.)

PIT on Various Income Types

Not all income is taxed equally:

| Income type | PIT rate (2026) | |---|---| | Employment income | 25.5% / 33% | | Self-employment income | 25.5% / 33% | | Dividends (standard CIT regime) | 0% | | Dividends (alternative CIT regime) | 6% | | Interest income | 25.5% | | Rental income | 10% (registered) or 25.5% (progressive) | | Capital gains (securities) | 25.5% | | Author royalties (unregistered) | 25% withholding |

The 10% flat rate on rental income (if registered with VID as rental activity) is one of Latvia's more favorable provisions for property owners. Compare this to 25.5% progressive taxation — the flat rate is almost always cheaper unless you have significant property-related expenses to deduct.

Filing Deadlines

Employers: Withhold IIN monthly, report via payroll declarations, remit by the 23rd of the following month.
Self-employed: Quarterly advance PIT payments (by the 23rd of the month following each quarter). Annual declaration by March 1.
Employees claiming deductions: Annual declaration by June 1 of the following year.
All taxpayers with multiple income sources: Annual declaration mandatory by June 1.

Need Help with Your Tax Declaration?

CORVUS Accounting & Tax assists individuals and business owners with annual PIT declarations, deduction optimization, and tax planning. From straightforward employee filings to complex multi-source income declarations, we ensure you are not paying more than you owe.