The beginning of 2025 will bring significant income tax changes to Estonia, affecting all workers, including those working flexibly. If you are using GoWorkaBit to find extra work or flexible working opportunities, it’s good to know how these changes will affect your income. Let’s take a closer look at the changes and give examples of how they apply.
What will change from 1 January 2025?
Income tax rate rises to 22%
The current income tax rate of 20% will rise to 22% in 2025. This means more money will have to be paid to the state from taxable income.
The tax-free income will remain the same as in 2024 and will depend on a person’s income. The maximum tax-free income will be €654 per month. If your income exceeds €1200, the tax-free income will be reduced according to the current calculation.
If you work somewhere other than GoWorkaBit, it’s a good idea to set your tax-free income to €0 in your account settings on our platform to avoid paying income tax next year.
Example: minimum hourly wage earner
The minimum hourly rate will rise to €5.31 gross in 2025.
If you work full-time (160 hours per month), your gross monthly salary would be:
160 hours × €5.31 = €849.60 gross.
Tax accounting:
- Tax-free income: €654
- Taxable income: €849,60 – 654 = €195,60
- Income tax (22%): €195.60 × 0.22 = €43.03
Your net premium (the amount that goes into your bank account) is also affected by the amount of your 2nd pillar pension contribution. You can check whether you have a pillar II pension and the percentage of your funded pension contribution on the Pension Centre website. However, we can calculate the general order of magnitude:
849.60 – 43.03 (income tax) – other taxes (e.g. unemployment insurance and pension insurance) = around €755-765 per month.
By comparison, today, in 2024, the net income for the same gross salary would be between €760 and €770, because the income tax rate is lower.
Example: an employee earning the average hourly wage in Estonia.
The average gross monthly wage in Estonia in the second half of 2024 would be around €1959. Assuming full-time work (160 hours per month), we get an average hourly wage:
€1959 ÷ 160 hours = €12.24 gross per hour.
If your hourly rate is €12.24 gross, you would earn €12 .24 per month working full-time:
160 hours × €12.24 = €1958.40 gross.
Tax accounting:
- Tax-free income: €0 (income above the tax-free income threshold)
- Taxable income: €1958,40
- Income tax (22%): 1958,40 × 0,22 = €430,85
Your net premium (the amount that goes into your bank account) is also affected by the amount of your 2nd pillar pension contribution. You can check whether you have a pillar II pension and the percentage of your funded pension contribution on the Pension Centre website. However, we can calculate the general order of magnitude:
1958.40 – 430.85 (income tax) – other taxes (e.g. unemployment insurance and pension insurance) = around €1,490-1,510 per month.
By comparison, in 2024, net income at the same gross wage would be around €1520-1540. An increase in the income tax rate will slightly reduce your net income.
What is GoWorkaBit doing to support you?
- We make sure that all taxes are correctly calculated. Your gross pay is always taxed correctly and the net amount goes straight into your bank account.
- If you need help or have any questions, we’re ready to advise you.
Tax changes can seem complicated, but understanding them will help you plan your income better. GoWorkaBit is always with you to make flexible working as easy and worry-free as possible!