# Latvia: personal income tax (2026) v0.3

> **Source-cited draft.** No accountant has reviewed this skill yet. Every figure comes from the consolidated Law On Personal Income Tax (PIT Law), the law On State Social Insurance, the Law On Taxes and Fees (LTF) and the Administrative Liability Law, in the versions in force for 2026, and from the State Revenue Service (VID) rate and annual return pages. See Sources for how they were read.

Related skills in this pack:

- Monthly withholding by employers (wage tax, the wage tax book): [latvia-payroll](latvia-payroll.md).
- Social contributions (VSAOI), the solidarity tax and self-employed contributions: [latvia-social-contributions](latvia-social-contributions.md).
- Non-residents, residence tests, treaties and foreign tax credit: [lv-cross-border](lv-cross-border.md).
- Company profit tax and the reduced-rate dividend regime at company level: [lv-corporate-income-tax](lv-corporate-income-tax.md).
- Microenterprise tax and the self-employed versus company choice: [latvia-tax-optimization](latvia-tax-optimization.md).

## Who this applies to

- **Residents** pay tax on worldwide income. Residence is set by the LTF (declared home in Latvia, or 183 days in any 12-month period). The residence rules are in [lv-cross-border](lv-cross-border.md).
- **Employees.** The employer withholds 25.5% wage tax each month (PIT Law s. 15(3)). The 33% band and the surcharge are settled in the annual return.
- **Self-employed people** registered with VID as performing economic activity. They must register before they start (PIT Law s. 28(6)). Business income is taxed in the annual return at the progressive rates. There are no advance payments: s. 18 was repealed from 2023.
- **Pensioners** get a larger non-taxable minimum (EUR 12,000 a year, s. 12(5)), applied by the pension payer.
- **People with capital income** (interest, taxable dividends, capital gains, crypto gains, investment account income) pay 25.5% on it, outside the bands (s. 15(5)).
- **Out of scope here.** Non-residents are taxed on Latvian-source income only and get no non-taxable minimum or reliefs, unless they are EU/EEA residents earning over 75% of their total income in Latvia (s. 12(2), s. 13(4)); see [lv-cross-border](lv-cross-border.md). Microenterprise tax payers are taxed under the Microenterprise Tax Law instead (s. 15(10)); see [latvia-tax-optimization](latvia-tax-optimization.md).

## Rates, bands and thresholds

| Item | Rate or amount | Year | Source |
|---|---|---|---|
| Annual income up to the maximum social insurance base | 25.5% | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 15(2)(1)) |
| Annual income above the maximum social insurance base | 33% | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 15(2)(2)) |
| Maximum social insurance base, which is the band threshold | EUR 105,300 a year | 2026 | https://likumi.lv/ta/id/45466-par-valsts-socialo-apdrosinasanu (s. 14(5)) |
| Monthly wage tax withheld by employer | 25.5% | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 15(3)) |
| Surcharge on total income above EUR 200,000 | 3% | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 15.1) |
| Non-taxable minimum, fixed | EUR 550 a month (EUR 6,600 a year). Section 12(1) says EUR 570, but transitional provision 197 sets EUR 550 for 2026 (EUR 510 for 2025); EUR 570 applies from 2027 | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 12(1); transitional provision 197(2)) |
| Pensioner non-taxable minimum | EUR 12,000 a year | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 12(5)) |
| Relief for each dependant | EUR 250 a month (EUR 3,000 a year) | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 13(1.2)) |
| Eligible expenses (education, medical, health insurance, donations) | Up to 50% of taxable income, max EUR 600 (EUR 600 per family member for education and medical) | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 10(1.3)) |
| Private pension and accumulating life insurance contributions | Up to 10% of income, max EUR 4,000 a year | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 10(1.9)) |
| Capital income and capital gains | 25.5% | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 15(5)) |
| Dividends paid under CIT Law s. 4.2 (reduced company rate) | 6% | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 15(5.1)) |
| Capital gains on deals started but not finished by 31 Dec 2024 | 20% (2025 to 2027) | 2026 | https://www.vid.gov.lv/lv/iedzivotaju-ienakuma-nodokla-likmes |
| Rental income without a registered business (notified to VID) | 10% | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 15(6)(3), s. 11(12)) |
| Minimum tax for a registered self-employed person with no or low business tax | EUR 50 | 2026 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli (s. 19(2.1)) |
| Employee social contribution (deductible) | 10.50% (total 34.09%, employer 23.59%) | 2026 | https://likumi.lv/ta/id/45466-par-valsts-socialo-apdrosinasanu (s. 18(1)) |
| Late payment interest | 0.05% a day | 2026 | https://likumi.lv/ta/id/33946-par-nodokliem-un-nodevam (s. 29(2)) |

The non-taxable minimum is a fixed amount. The old income-tested "differentiated" minimum was repealed from 1 January 2025 (PIT Law transitional provision 202). The minimum and dependant relief apply only to income taxed at the s. 15(2) and 15(3) rates, not to capital income (s. 12(9), s. 13(3)).

## The taxable base

1. **Collect the annual income** taxed at the progressive rates: salary, business profit, pensions, rental income under the general regime, royalties, lottery wins over EUR 3,000 (s. 15(24)).
2. **Deduct social contributions** paid by the person (s. 10(1)(1)) and the solidarity tax (s. 10(1)(1.1)). In the annual return, the deductible contributions are reduced by any part of the solidarity tax moved to the PIT account (s. 10(1.10)).
3. **Deduct the non-taxable minimum** (EUR 6,600 for a full year: EUR 550 a month, s. 12(1) and transitional provision 197(2)), dependant relief (EUR 250 a month per dependant, s. 13(1.2)), disability and repressed-person reliefs (s. 13(1)(4)), and eligible expenses within the caps (s. 10).
4. **Tax the result.** The 33% band is tested on income before deductions. If annual income at the progressive rates (exempt income left out, s. 15(21)) exceeds EUR 105,300, all the step 2 and 3 deductions come off the part up to EUR 105,300 first, and only the rest comes off the excess (s. 3(2.4)). So tax = 25.5% x (EUR 105,300 less deductions) + 33% x (income over EUR 105,300). Deductions larger than EUR 105,300 save tax at 25.5% only (s. 15(15)). Employees have already had 25.5% withheld each month; the return settles the difference. See example 3.
5. **Capital income is taxed separately** at 25.5% (s. 15(5)). A capital gain is the sale price less the purchase cost and later improvements. Losses on one asset offset gains on another in the same year. A net loss is not carried forward and does not offset other income (s. 11.9(9), (10)).
6. **Dividends** are exempt when the company paid Latvian corporate income tax on the distributed profit, or a foreign company paid profit tax or had tax withheld on the dividend (s. 9(1)(2.1)). Dividends paid under the reduced CIT rate in CIT Law s. 4.2 are taxed at 6% instead (s. 9(3.9), s. 15(5.1)). See [lv-corporate-income-tax](lv-corporate-income-tax.md).
7. **Surcharge**: 3% on the excess of total income over EUR 200,000 (s. 15.1(1)). Total income is the year's taxable incomes, including capital income and capital gains (and so 6% dividends), plus exempt dividends and liquidation quotas under s. 9(1)(2.1) and (2.2) (s. 15.1(2)). It is measured before social contributions, the non-taxable minimum, reliefs and eligible expenses: s. 15.1(2)(1) counts the taxable incomes themselves, and s. 10(1) and s. 3(2) take those deductions off the taxable incomes as a later step. A capital gain counts as the net gain (sale price less cost, s. 11.9). The surcharge is paid through the annual return, by the s. 19(3) dates (s. 19(2.6)).
8. **Main home exemption**: a gain on real estate owned over 60 months and used as the declared home for at least 12 months in a row in that period is exempt (s. 9(1)(33)). Related exemptions are in s. 9(1)(33.1) to (34.3).

**Business income (self-employed).** Taxable income is business receipts less documented business costs (s. 11). Business losses can be carried forward for three years against later business profit only (s. 11(9)). They cannot offset other income (s. 19(2)). A registered person with no business tax, or with business tax of EUR 50 or less, pays EUR 50 by 23 June (s. 19(2.1)), with exceptions in s. 19(2.2) to (2.4). Social contributions for the self-employed are in [latvia-social-contributions](latvia-social-contributions.md).

**Microenterprise tax payers.** Their microenterprise income is taxed under the Microenterprise Tax Law, not at the PIT rates (s. 15(10)). Eligible expenses and reliefs do not apply to it (s. 10(5)). See [latvia-tax-optimization](latvia-tax-optimization.md).

## Deadlines and filing

| What | When | Source |
|---|---|---|
| Annual return (gada ienākumu deklarācija), general window | 1 March to 1 June 2027 for tax year 2026 | PIT Law s. 19(5) |
| Annual return if income at the s. 15(2) rates exceeds EUR 105,300 | 1 April to 1 July 2027 | PIT Law s. 19(5); VID annual return page |
| Payment of tax due, income up to EUR 105,300 | 23 June 2027 | PIT Law s. 19(3) |
| Payment of tax due, income above EUR 105,300 | 23 July 2027 | PIT Law s. 19(3) |
| Instalments if tax due exceeds EUR 640 | Thirds on 23 June, 23 July, 23 August (or 23 July, 23 August, 23 September above EUR 105,300) | PIT Law s. 19(3)(1), (2) |
| Quarterly capital gains return (gains over EUR 1,000 in the quarter) | 15th of the month after the quarter | PIT Law s. 19(5.3) |
| Annual capital gains return (quarterly gains up to EUR 1,000) | 15 January 2027 | PIT Law s. 19(5.3) |
| Tax on a capital gains return | By the 23rd of the month in which the return is filed | PIT Law s. 19(3.2) |
| Due date on a weekend or public holiday | Next working day | LTF s. 29(3.1) |
| Register as self-employed | Before starting the activity | PIT Law s. 28(6) |

**Who must file.** VID says a return is compulsory when tax was not fully withheld during the year, or when the person is responsible for paying the tax themselves (for example a self-employed person, a seaman or a landlord). The law adds:

- anyone with business income (s. 20(4)(1));
- anyone who owes extra tax because of the 33% band or the 3% surcharge (s. 20(4)(2));
- residents with income from outside the EU, or other income not taxed at source (VID annual return page);
- anyone who files must show exempt income if it totals over EUR 10,000, and exempt dividends and liquidation quotas (s. 9(1)(2.1), (2.2)) whatever the amount (s. 19(2)).

Returns are filed in VID's Electronic Declaration System (EDS). VID pre-fills the data it holds. If a person who must file does not, VID's calculation in the EDS draft stands and becomes payable (s. 19(5.4), s. 20(2)). Others may file voluntarily to claim eligible expenses, and can file or correct a return for the three previous years (VID annual return page). Overpayments are refunded within three months of filing (s. 19(4)), or automatically under s. 20.1 when no return is required.

## Penalties and interest

| Breach | Consequence | Source |
|---|---|---|
| Late payment | 0.05% of the unpaid tax for each day late, from the day after the due date | LTF s. 29(2); PIT Law s. 31.1(2), s. 31(3) |
| How late interest is charged on the single tax account | Calculated on the 1st and 15th of each month; none if the tax is paid by the last day of the month in which it fell due; it stops growing at two fifths of the unpaid tax | LTF s. 29(2.1), (2.2), (7) |
| Return filed 3 to 10 days late | Warning or fine of 5 to 14 fine units (EUR 25 to 70) | LTF s. 141(1) |
| Return filed 11 to 20 days late | 15 to 30 units (EUR 75 to 150) | LTF s. 141(2) |
| Return filed 21 to 30 days late | 31 to 56 units (EUR 155 to 280) | LTF s. 141(3) |
| Return filed over 30 days late or not filed | 57 to 140 units (EUR 285 to 700) | LTF s. 141(4) |
| Tax understated (found in an audit) by up to 15% of the tax due | Penalty of 20% of the understated tax, plus the tax and late interest | LTF s. 32(4); PIT Law s. 31.3(1) |
| Tax understated by more than 15% | Penalty of 30% of the understated tax | LTF s. 32(5) |
| First offence, returns and payments on time, cooperation | Penalty halved | LTF s. 32(7) |
| Unregistered business activity | Tax and late interest if the person registers and files within 30 days of VID's reminder; a 50% penalty if they register but do not file; 100% if they do neither | LTF s. 34(2); PIT Law s. 32(2) |

One fine unit is EUR 5 (Administrative Liability Law s. 16(2)).

## Cross-border points

- Non-residents pay tax only on Latvian-source income, mostly by withholding at source. They do not get the non-taxable minimum, dependant relief or most eligible expenses, unless they are EU/EEA residents earning over 75% of their total income in Latvia (s. 10(3), (4), s. 12(2), s. 13(4)).
- An employee covered by another country's social insurance pays 33% wage tax on monthly pay above one twelfth of EUR 105,300 (s. 15(16)).
- Residents earning salary in another EU state do not report it in the return; income from outside the EU must be reported (VID annual return page).
- Foreign income in the return is taxed at the person's average weighted rate (s. 19(1.1)). Foreign tax credit and treaties: s. 24.
- A foreign national with a long-stay visa under Immigration Law s. 11(5) (remote worker) may choose 15% on that income for 365 days (s. 15(19.2)).
- Remigrating diaspora pensioners keep the foreign country's pension exemption (s. 12(13) to (19)).

For residence, treaties, withholding on payments to non-residents and exit rules, use [lv-cross-border](lv-cross-border.md).

## Worked examples

**Example 1: employee with one child.** A resident employee earns EUR 30,000 gross salary in 2026 and supports one child under 18 all year. No other income and no eligible expenses. Employee social contributions are 10.5% of salary, EUR 3,150. Deduct those, the EUR 6,600 non-taxable minimum (EUR 550 x 12) and EUR 3,000 dependant relief (EUR 250 x 12). Taxable income is EUR 17,250, all below EUR 105,300, so it is all taxed at 25.5%: tax EUR 4,398.75. If the employer applied the minimum and relief through the wage tax book each month, the withholding already matches and no return is required.

```oa-check
name: Employee EUR 30,000 salary, one dependant (2026)
inputs:
  salary: 30000
  months: 12
  dependants: 1
steps:
  - vsaoi: salary * 0.105
  - ntm: 550 * months
  - dependant_relief: 250 * months * dependants
  - taxable: salary - vsaoi - ntm - dependant_relief
  - tax: taxable * 0.255
expected:
  vsaoi: 3150
  ntm: 6600
  dependant_relief: 3000
  taxable: 17250
  tax: 4398.75
```

**Example 2: salary plus a large share sale (surcharge).** A resident employee earns EUR 60,000 salary and sells shares in 2026 for a gain of EUR 250,000. No dependants. Salary: EUR 60,000 less 10.5% contributions (EUR 6,300) and the EUR 6,600 minimum leaves EUR 47,100, taxed at 25.5%: EUR 12,010.50. The gain is capital income at 25.5%: EUR 63,750. Total income for the surcharge is EUR 310,000 (salary plus gain, s. 15.1(2)). The excess over EUR 200,000 is EUR 110,000, so the 3% surcharge is EUR 3,300. Total tax is EUR 79,060.50. The surcharge base is the gross figures: contributions and the minimum are not taken off (s. 15.1(2)). The gain is declared in a quarterly capital gains return and its EUR 63,750 is paid by the 23rd of the month that return is filed (s. 19(5.3), (3.2)). The person must also file the annual return (s. 20(4)(2)). Income at the progressive rates is under EUR 105,300, so the window is 1 March to 1 June 2027 and the surcharge is paid by 23 June 2027 (s. 19(5), (3), (2.6)).

```oa-check
name: Salary EUR 60,000 plus capital gain EUR 250,000, surcharge (2026)
inputs:
  salary: 60000
  gain: 250000
steps:
  - vsaoi: salary * 0.105
  - ntm: 550 * 12
  - prog_base: salary - vsaoi - ntm
  - prog_tax: prog_base * 0.255
  - gain_tax: gain * 0.255
  - surcharge_income: salary + gain
  - surcharge: max(surcharge_income - 200000, 0) * 0.03
  - total_tax: prog_tax + gain_tax + surcharge
expected:
  vsaoi: 6300
  prog_base: 47100
  prog_tax: 12010.50
  gain_tax: 63750
  surcharge: 3300
  total_tax: 79060.50
```

**Example 3: high earner with deductions (band test).** A resident's income taxed at the progressive rates in 2026 is EUR 130,000. Their deductions under steps 2 and 3 (social contributions, the minimum, reliefs, eligible expenses) total EUR 20,000. Income exceeds EUR 105,300, so the deductions come off the 25.5% band (s. 3(2.4)): EUR 85,300 at 25.5% is EUR 21,751.50, and the EUR 24,700 excess at 33% is EUR 8,151. Tax is EUR 29,902.50. Deducting first and banding the EUR 110,000 result would give EUR 28,402.50, which is EUR 1,500 too low. This person files between 1 April and 1 July 2027 and pays by 23 July 2027 (s. 19(5), (3)).

```oa-check
name: Band test with deductions, income EUR 130,000 (2026)
inputs:
  income: 130000
  deductions: 20000
  cap: 105300
steps:
  - low_band: max(min(income, cap) - deductions, 0)
  - high_band: max(income - cap, 0)
  - tax: low_band * 0.255 + high_band * 0.33
expected:
  low_band: 85300
  high_band: 24700
  tax: 29902.50
```

## Ask the client first

1. Were you a Latvian tax resident for all of 2026 (declared home, days in Latvia)? If not, use [lv-cross-border](lv-cross-border.md).
2. What income did you have: salary, registered business, rental, pension, dividends, interest, share or crypto sales, foreign income? Which country paid each?
3. Did your income at the progressive rates exceed EUR 105,300, or your total income exceed EUR 200,000? This sets the band, the surcharge and the filing window.
4. Did you give your wage tax book to an employer or pension payer, and for which months?
5. Who did you support in 2026 (children, students up to 24, a non-working spouse), and does any of them have their own income?
6. Do you have receipts for education, medical costs, health insurance, donations, private pension or life insurance payments?

## Sources

| Source | URL | Read on |
|---|---|---|
| Law On Personal Income Tax (Par iedzīvotāju ienākuma nodokli), consolidated with amendments to 3 December 2025 in force 1 January 2026: ss. 3, 9, 10, 11, 11.9, 12, 13, 15, 15.1, 18, 19, 20, 28, 31, 31.1, 31.3, 32; transitional provision 202 | https://likumi.lv/ta/id/56880-par-iedzivotaju-ienakuma-nodokli | 2026-10-24 |
| Law On State Social Insurance (Par valsts sociālo apdrošināšanu), consolidated with amendments to 16 April 2026: ss. 14(5), 18(1) | https://likumi.lv/ta/id/45466-par-valsts-socialo-apdrosinasanu | 2026-10-24 |
| Law On Taxes and Fees (Par nodokļiem un nodevām), consolidated with amendments in force 1 January 2026: ss. 29, 32, 34, 141 | https://likumi.lv/ta/id/33946-par-nodokliem-un-nodevam | 2026-10-24 |
| Administrative Liability Law (Administratīvās atbildības likums): s. 16 | https://likumi.lv/ta/id/303007 | 2026-10-24 |
| VID, personal income tax rates (updated 31 December 2025) | https://www.vid.gov.lv/lv/iedzivotaju-ienakuma-nodokla-likmes | 2026-10-24 |
| VID, annual income return (who must file, windows, late interest) | https://www.vid.gov.lv/lv/gada-ienakumu-deklaracija | 2026-10-24 |

likumi.lv and vid.gov.lv refused connections from our network on 23 and 24 October 2026. All texts were read from Internet Archive (web.archive.org) copies made in 2026: the PIT Law captured 1 September 2026, the law On State Social Insurance 3 October 2026, the LTF 18 September 2026, the Administrative Liability Law 10 August 2026, the VID rates page 12 October 2026 and the VID annual return page 9 September 2026.

Not yet confirmed: a VID worked example of the surcharge base (the skill follows the PIT Law text of s. 15.1(2), s. 10(1) and s. 3(2); VID's rates page says only "total income"); the 2026 microenterprise tax rate and threshold (Microenterprise Tax Law not read); the Cabinet regulation on eligible expenses (not read); the disability and politically repressed person relief amounts set by Cabinet regulation (not read); amendments to the PIT Law adopted after 1 September 2026.

> Contributed by Michael Cutajar.