# Lithuania: personal income tax for residents (2026)

Source-cited draft: not reviewed by an accountant, not for filing.

The law is the Law on Personal Income Tax (Gyventojų pajamų mokesčio įstatymas, No. IX-1007, "GPMĮ"), read in the consolidated version in force from 11 June 2026 to 31 December 2026 on e-tar.lt, together with the State Tax Inspectorate's (VMI) commentary of 19 October 2026. Penalties and interest come from the Law on Tax Administration (No. IX-2112, "MAĮ"). The tax year is the calendar year (GPMĮ article 7). Currency: euro.

Related skills:

- Non-residents, residence tests, departure, foreign tax credits and tax withheld from payments abroad: [lt-cross-border](lt-cross-border.md).
- Sodra social insurance and compulsory health insurance, for employees and the self-employed, and the employer's monthly payroll returns: [lt-payroll-social](lt-payroll-social.md).
- Companies: [lt-corporate-income-tax](lt-corporate-income-tax.md). VAT: [lithuania-vat-return](lithuania-vat-return.md).

## Who this applies to

- **Lithuanian residents** under GPMĮ article 4. A resident is taxed on worldwide income. The residence tests (permanent home, centre of interests, 183 days, the 280 and 90 day test over two years) are set out in [lt-cross-border](lt-cross-border.md).
- **Employees**, whose employer withholds tax on A class income (GPMĮ article 23(1)).
- **People with individual activity** (individuali veikla) registered with VMI: freelancers, sole traders and self-employed professionals. A person who held a business certificate (verslo liudijimas) is covered too, but the fixed tax itself is set by each municipality (GPMĮ article 6(3)).
- **Investors and landlords**: dividends, interest, rent and gains on shares, property and other assets.

Out of scope here: non-residents (see [lt-cross-border](lt-cross-border.md); a non-resident gets the NPD only through the annual return, GPMĮ article 20(9)); Sodra contributions ([lt-payroll-social](lt-payroll-social.md)); agricultural individual activity beyond the rates listed below; the investment account regime of GPMĮ article 12-1 beyond its rate; controlled foreign company income (GPMĮ article 13).

## Rates, bands and thresholds

VDU is the average wage used for the year's social insurance base. For 2026 VMI gives 12 VDU as EUR 27,745.80, 36 VDU as EUR 83,237.40 and 60 VDU as EUR 138,729. MMA is the minimum monthly wage in force on 1 January: EUR 1,153 in 2026 (VMI commentary on article 20).

| Item | Rate or amount | Year | Source |
|---|---|---|---|
| Annual income up to 36 VDU (EUR 83,237.40) | 20% | 2026 | [GPMĮ art. 6(1)(1)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr); [VMI commentary](https://www.vmi.lt/evmi/documents/20142/391224/GPM+aktualus+komentaras+%28aktuali+redakcija+2026-10-19%29+.pdf/541c2138-7e9c-3e99-33bf-fc547c5cdc28?t=1792476568043) art. 6 |
| Annual income over 36 VDU up to 60 VDU (EUR 83,237.40 to EUR 138,729) | 25% | 2026 | [GPMĮ art. 6(1)(2)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Annual income over 60 VDU (EUR 138,729) | 32% | 2026 | [GPMĮ art. 6(1)(3)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Non-employment income (interest, rent, gains, other income) up to 12 VDU (EUR 27,745.80) a year; above that the 6(1) bands apply | 15% | 2026 | [GPMĮ art. 6(2)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Dividends (distributed profits) | 15%, flat | 2026 | [GPMĮ art. 6(6)(1)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Gain on shares held over 5 years (not via an investment account) | 15%, flat | 2026 | [GPMĮ art. 6(6)(3)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Investment account income; sickness, maternity and similar benefits | 15%, flat | 2026 | [GPMĮ art. 6(6)(2), (6)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Individual activity taxable income up to EUR 42,500 | 20%, less the credit below | 2026 | [GPMĮ art. 6(8), 18-2(1)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Individual activity credit, taxable income up to EUR 20,000 | income x 0.15 (5% effective) | 2026 | [GPMĮ art. 18-2(2)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Individual activity credit, taxable income over EUR 20,000 up to EUR 42,500 | income x (0.15 - 2/300,000 x (income - 20,000)) | 2026 | [GPMĮ art. 18-2(3)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Individual activity taxable income over EUR 42,500 | No credit; all of it taxed at the 6(1) bands | 2026 | [VMI commentary](https://www.vmi.lt/evmi/documents/20142/391224/GPM+aktualus+komentaras+%28aktuali+redakcija+2026-10-19%29+.pdf/541c2138-7e9c-3e99-33bf-fc547c5cdc28?t=1792476568043) art. 18-2 |
| Flat cost option for individual activity | 30% of income | 2026 | [GPMĮ art. 18(12)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Agricultural individual activity | 15% up to 60 VDU, 20% above; credit x 0.1, sliding | 2026 | [GPMĮ art. 6(9), 18-2(6)-(9)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Business certificate or rent under the fixed tax: income ceiling | EUR 50,000 a year | 2026 | [GPMĮ art. 6(4), (5)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Sale of waste (not individual activity), up to 12 VDU | 5% | 2026 | [GPMĮ art. 6(7)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Monthly NPD, monthly employment income up to MMA (EUR 1,153) | EUR 747 | 2026 | [GPMĮ art. 20(2)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr); [VMI commentary](https://www.vmi.lt/evmi/documents/20142/391224/GPM+aktualus+komentaras+%28aktuali+redakcija+2026-10-19%29+.pdf/541c2138-7e9c-3e99-33bf-fc547c5cdc28?t=1792476568043) art. 20 |
| Monthly NPD, above MMA | 747 - 0.49 x (monthly income - 1,153); nil from EUR 2,677.49 | 2026 | same |
| Annual NPD (MNPD), annual income (GMP) up to 12 MMA (EUR 13,836) | EUR 8,964 | 2026 | [GPMĮ art. 20(1)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Annual NPD, above 12 MMA | 8,964 - 0.49 x (GMP - 13,836); never below 0 | 2026 | [GPMĮ art. 20(1), (3)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| NPD for disability (0-25% and 30-55% participation level) | EUR 1,127 and EUR 1,057 a month | 2026 | [GPMĮ art. 20(6)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Exempt interest (deposits, bonds, government securities) | EUR 500 a year | 2026 | [GPMĮ art. 17(1)(20)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Exempt interest via peer-to-peer and crowdfunding platforms | EUR 500 a year | 2026 | [GPMĮ art. 17(1)(20-2)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Exempt gain on financial instruments | EUR 500 a year | 2026 | [GPMĮ art. 17(1)(30)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Exempt gain on other private assets | EUR 2,500 a year | 2026 | [GPMĮ art. 17(1)(27)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Gifts from people outside the close family | EUR 2,500 a year exempt | 2026 | [GPMĮ art. 17(1)(26)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Deductible expenses (art. 21): overall cap | 25% of taxable income; insurance and pension items together max EUR 1,500 | 2026 | [GPMĮ art. 21(3)](https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr) |
| Late payment interest | 0.027% a day from 1 August 2026 | 2026 | [VMI, late payment interest](https://www.vmi.lt/evmi/delspinigiai-baudos-ir-atleidimas-nuo-ju-96-100-str.-138-143-str.-) |
| Fine on tax found unpaid at audit | 20% to 100% of the shortfall | 2026 | [MAĮ art. 139(1)](https://www.e-tar.lt/portal/lt/legalAct/TAR.3EB34933E485/asr) |

**How the bands stack.** Income taxed at the 15% rate under article 6(2), the 5% waste rate and individual activity income up to EUR 42,500 count first when the 36 VDU and 60 VDU thresholds are applied (GPMĮ article 6(11)). Dividends, shares held over 5 years and the other 6(6) items stay outside the annual sum (article 6(10)). So a person with EUR 40,000 of individual activity income and EUR 60,000 of salary fills the 20% band with the first EUR 40,000, and EUR 16,762.60 of the salary falls in the 25% band.

**What changed for 2026.** Article 6 was amended by Laws No. XV-343 (26 June 2025) and XV-680 (16 December 2025), and article 18-2 by Laws No. XV-343 and XV-681 (16 December 2025). From 2026: the 25% middle band between 36 and 60 VDU; individual activity at 20% under article 6(8), with the credit running out at EUR 42,500 and article 18-2(4) repealed from 1 January 2026; and the monthly NPD at 747 - 0.49 x (income - MMA) with the annual EUR 8,964 cap. The 2025 version of this skill had individual activity at 15%.

## The taxable base

**Employment income.** Tax is worked out on gross pay, before the employee's Sodra and health contributions (VMI's NPD example in its article 20 commentary uses pay before health insurance, social insurance and income tax). The employer deducts the monthly NPD when the employee asks for it in writing at one place of work (GPMĮ articles 20(4) and 23(2)). After the year the annual NPD is recomputed on the person's total annual income (GMP) in the return; if the monthly NPD given was too high, tax falls due.

**What GMP includes.** All taxable income for the year, except income taxed at the 5% waste rate, business certificate income, and life insurance or pension payouts up to the premiums paid. It is counted before the article 21 expenses and before the NPD itself (GPMĮ article 20(7), applying to 2026 income). The NPD reduces only employment-related income (article 20(1)).

**Individual activity.** Taxable income is income less allowable deductions (GPMĮ articles 16(1)(3) and 18). The person takes either actual documented expenses, including their own Sodra and health contributions (article 18(11)), or a flat 30% of income in place of the other article 18 deductions, with no documents needed (article 18(12)). The 30% option is not open where the individual activity income, or part of it, comes from a person with whom the individual has an employment relationship or one equivalent to it. Then:

- taxable income up to EUR 20,000: tax = 20% x income - 15% x income, so 5% effective;
- over EUR 20,000 up to EUR 42,500: tax = 20% x income - income x (0.15 - 2/300,000 x (income - 20,000)); the effective rate climbs to 20%;
- over EUR 42,500: no credit at all; the whole amount goes into the article 6(1) bands (VMI commentary on article 18-2, 2026 example of EUR 52,000). There is a cliff just above EUR 42,500.

Losses from individual activity carry forward and stay with the type of activity that made them (GPMĮ article 18-1; VMI commentary examples).

**Capital income and gains.** Interest, rent and gains from selling assets are taxed at 15% up to 12 VDU of such income in the year and at the article 6(1) bands above that (article 6(2)). Dividends and gains on shares held more than 5 years are taxed at a flat 15% (article 6(6)). A gain is the sale price less the documented acquisition cost, including mandatory payments and reconstruction or capital repair costs; for identical assets bought at different times the earliest cost goes first (GPMĮ article 19). Exempt are:

- interest up to EUR 500 a year, and crowdfunding or peer-to-peer interest up to a further EUR 500 (article 17(1)(20), (20-2));
- gains on financial instruments up to EUR 500 a year, not for instruments issued by entities in target territories, nor share buy-backs (article 17(1)(30));
- gains on other private assets up to EUR 2,500 a year (article 17(1)(27));
- registered movable property (such as a car) held over 3 years, and real estate in the EEA held over 5 years (article 17(1)(28));
- a home in the EEA where the person had declared residence for the 2 years before the sale, or where the proceeds buy another such home within 1 year (article 17(1)(53), (54)).

**Gifts and inheritance.** Gifts from a spouse, children, parents, siblings, grandchildren and grandparents are exempt; from others, EUR 2,500 a year is exempt. Inheritance that falls under the inheritance tax law is exempt from income tax (article 17(1)(26)).

**Deductible expenses (article 21).** A resident can deduct in the annual return: life insurance premiums and pension fund contributions under contracts made by 31 December 2024 (paid until 31 December 2034); additional pension accumulation contributions under the Law on Pension Accumulation article 8(3), for the part above 3% of the person's contribution base; and vocational training or higher education fees. The total is capped at 25% of taxable income, and the insurance and pension items together at EUR 1,500 (article 21(3)).

## Deadlines and filing

- **Employer withholding:** tax on A class income paid by the 15th of a month is due by the 15th; on income paid later in the month, by the month's end (GPMĮ article 23(3)). The employer's returns are covered in [lt-payroll-social](lt-payroll-social.md).
- **Annual return:** a resident files the annual income tax return for the year by **1 May** of the next year (GPMĮ article 27(1)).
- **Payment:** the balance between the tax in the return and the tax already withheld is paid by the same 1 May deadline (GPMĮ article 27(5)). An overpayment is set off or refunded under MAĮ (article 27(7)).
- **Who does not have to file:** a resident with only A class employment income, who claims no article 21 expenses, and whose band and NPD do not need recalculating (article 27(2)).
- **Who must file even with no income:** anyone who had registered individual activity or held a business certificate during the year (article 27(3)).
- **Controlled foreign companies:** a resident with such income adds VMI's annex to the return (article 27(6)).
- **Leaving Lithuania for good:** a departure return is filed before leaving (GPMĮ article 29); see [lt-cross-border](lt-cross-border.md).

## Penalties and interest

- **Late payment interest** (delspinigiai): from 1 August 2026 the rate is **0.027% for each day** of delay, set by order of the Minister of Finance (VMI page on late payment interest; MAĮ articles 96 and 99).
- **Tax found at audit:** where an audit finds tax not calculated or not declared, or a lower rate applied unlawfully, the taxpayer pays the shortfall plus a fine of **20% to 100%** of it (MAĮ article 139(1)). If a fine for a breach of the same tax law was already imposed within the limitation period of MAĮ article 68(4), the new fine is doubled (article 139(3)). These fines do not apply where the taxpayer files a late return, or corrects a return that declared too little, before the date of VMI's audit order (article 139(4)).
- **Waiver:** VMI can waive fines and interest in the cases in MAĮ article 141.

## Cross-border points

- A resident pays Lithuanian tax on foreign income too, with a credit for foreign tax capped at the Lithuanian tax on that income and worked out country by country (GPMĮ article 37(4), (5)). VMI's commentary marks the treaties with Russia and Belarus as not applied from 1 January 2026. Details: [lt-cross-border](lt-cross-border.md).
- Where foreign employment income is exempt under a treaty, the bands are apportioned to the share of income taxed in Lithuania (VMI commentary on article 6, example of EUR 40,000 Lithuanian and EUR 90,000 Norwegian pay).
- A non-resident's tax is withheld at the article 6 rates, looking at each payment alone (GPMĮ article 23(7)), and the NPD is only available through an annual return (article 20(9)). Everything for non-residents is in [lt-cross-border](lt-cross-border.md).

## Worked examples

**Example 1: employee on EUR 2,000 a month for all of 2026.** Gross pay is EUR 24,000 for the year, with no other income and no expenses to claim. The employee asked for the NPD. Each month the NPD is 747 - 0.49 x (2,000 - 1,153) = EUR 331.97. Over the year that is EUR 3,983.64, which matches the annual formula: 8,964 - 0.49 x (24,000 - 13,836) = EUR 3,983.64. Taxable income is EUR 20,016.36, all inside the 20% band, so the tax is EUR 4,003.27. No return is needed, because the monthly NPD equals the annual one (GPMĮ article 27(2)).

```oa-check
name: Employee, EUR 2,000 a month gross, full year 2026 with NPD
inputs:
  monthly_pay: 2000
  months: 12
  mma: 1153
steps:
  - annual_pay: monthly_pay * months
  - monthly_npd: max(747 - 49 / 100 * (monthly_pay - mma), 0)
  - annual_npd: max(8964 - 49 / 100 * (annual_pay - 12 * mma), 0)
  - taxable: annual_pay - annual_npd
  - tax: round(taxable * 20 / 100, 2)
expected:
  annual_pay: 24000
  monthly_npd: 331.97
  annual_npd: 3983.64
  taxable: 20016.36
  tax: 4003.27
```

**Example 2: a freelancer near the EUR 42,500 cliff.** A web designer with registered individual activity bills EUR 55,000 in 2026 to clients unrelated to any employer, has no other income, and takes the 30% flat cost option. Deductions are EUR 16,500 and taxable income is EUR 38,500, under EUR 42,500. Tax at 20% is EUR 7,700. The credit is 38,500 x (0.15 - 2/300,000 x 18,500) = EUR 1,026.67. Tax due is EUR 6,673.33, about 17.3% of taxable income. Had she billed EUR 61,500 instead, taxable income would be EUR 43,050: no credit at all, so EUR 8,610 at 20% (still inside the 36 VDU band). EUR 6,500 more billing costs EUR 1,936.67 more tax. The tax is paid with the annual return by 1 May 2027. Sodra contributions come on top (see [lt-payroll-social](lt-payroll-social.md)).

```oa-check
name: Individual activity, 30% flat costs, EUR 55,000 v EUR 61,500 billed, 2026
inputs:
  revenue: 55000
  revenue_alt: 61500
steps:
  - deduction: revenue * 30 / 100
  - taxable: revenue - deduction
  - tax_at_20: taxable * 20 / 100
  - credit: round(taxable * (15 / 100 - 2 / 300000 * (taxable - 20000)), 2)
  - tax_due: tax_at_20 - credit
  - taxable_alt: revenue_alt - revenue_alt * 30 / 100
  - tax_alt_no_credit: taxable_alt * 20 / 100
  - extra_tax: tax_alt_no_credit - tax_due
expected:
  deduction: 16500
  taxable: 38500
  tax_at_20: 7700
  credit: 1026.67
  tax_due: 6673.33
  taxable_alt: 43050
  tax_alt_no_credit: 8610
  extra_tax: 1936.67
```

## Ask the client first

1. Were you a Lithuanian resident for all of 2026, and do you have income from abroad?
2. What kinds of income did you have: salary, registered individual activity, a business certificate, dividends, interest, rent, sales of shares or property?
3. For individual activity: total income, actual expenses with documents, and whether any of the income came from someone you also work for as an employee (that rules out the 30% option).
4. For any sale: purchase date, cost with documents, and for a home whether you had declared residence there for the 2 years before the sale.
5. Did your employer apply the NPD, and at more than one job?
6. Did you pay life insurance, pension contributions or tuition you want to deduct?

## Sources

| Source | URL | Read on |
|---|---|---|
| Law on Personal Income Tax IX-1007, consolidated from 11 June 2026, arts 6, 16, 17, 18, 18-2, 19, 20, 21, 23, 27 | https://www.e-tar.lt/portal/lt/legalAct/TAR.C677663D2202/asr | 2026-10-24 |
| VMI, GPMĮ commentary (2026-10-19 edition), arts 6, 18-2, 20 | https://www.vmi.lt/evmi/documents/20142/391224/GPM+aktualus+komentaras+%28aktuali+redakcija+2026-10-19%29+.pdf/541c2138-7e9c-3e99-33bf-fc547c5cdc28?t=1792476568043 | 2026-10-24 |
| VMI, personal income tax page | https://www.vmi.lt/evmi/gyventoju-pajamu-mokestis | 2026-10-24 |
| VMI, late payment interest (KM2633, 30 July 2026) | https://www.vmi.lt/evmi/delspinigiai-baudos-ir-atleidimas-nuo-ju-96-100-str.-138-143-str.- | 2026-10-24 |
| Law on Tax Administration IX-2112, consolidated from 1 July 2026, arts 96, 99, 139, 141 | https://www.e-tar.lt/portal/lt/legalAct/TAR.3EB34933E485/asr | 2026-10-24 |

Not yet confirmed: the fine for filing the annual return late (Code of Administrative Offences, not read); whether individual activity needs advance tax payments during the year; crypto-asset rules beyond the general gain rules above; Sodra figures for the self-employed (lt-payroll-social still carries 2025 figures).

> Contributed by Michael Cutajar.