Estonia Salary Calculator 2026
Gross-to-net salary calculator for Estonia. For employees and OÜ owners.
Sourced from official government publications
Tax rules last verified
Built by SalaryCalc team
How salary tax works in Estonia in 2026
This calculator models 4 tax regimes for Estonia — 1 for employed staff and 3 for freelancers and company owners. All amounts are calculated in EUR and can be displayed in another currency at current exchange rates. Each regime below lists the rates, thresholds and contributions the calculator applies; select one above to see it worked through on your own figure.
Employment income
Standard Employee (Töötaja)
Standard Estonian employment. Flat 22% PIT on (gross − UI − II pillar − basic exemption). The 24% PIT increase planned for 2026 was cancelled by the Riigikogu in December 2025 and the 2% defense tax (2026–2028) was abolished in June 2025 — neither applies. Basic exemption is a flat €700/month = €8 400/year from 2026 — the income-based taper ("tax hump") was abolished.
- PIT 22% flat
- UI: 1.6% on gross
- II pillar: 2% on gross
- Basic exemption: €8 400/yr (flat, no taper)
- No defense tax in 2026
Freelance, self-employed and company regimes
OÜ retention strategy (Osaühing — kasumi hoiustamine)
Keep profits in company (defer 22% tax). Pay only when distributing.
Estonian private limited company (Osaühing). Estonia taxes retained corporate profit at 0% — only distributed dividends pay 22% CIT. Default strategy: keep profit inside the OÜ and defer the 22%. Owner-paid salary triggers the standard PIT + 33% employer Social Tax pipeline (skipped for non-resident e-residents).
- 0% on retained profits
- 22% CIT on dividends (gross → net 0.78×)
- 33% employer Social Tax on salary only
- No personal income tax on dividend received
- VAT threshold: €40 000 turnover
e-Residency: for non-resident owners, Estonian social tax on salary typically does not apply — depends on residence and tax treaty.
OÜ salary + dividend mix (Osaühing — palk + dividend)
Pay yourself regularly via salary + take dividends as needed.
Same OÜ vehicle as the retention regime, but a different operational pattern: pay yourself a regular salary plus dividends as needed. Salary leg runs through the full PIT 22% + 33% employer Social Tax pipeline; dividend leg pays 22% CIT.
- Salary leg: PIT 22% + UI + II pillar + 33% employer SS
- Dividend leg: 22% CIT
- Combined effective: ~25–30%
- Same legal vehicle as OÜ retention
FIE sole proprietor (Füüsilisest Isikust Ettevõtja)
Generally less optimal than OÜ for IT. Listed for completeness.
Sole proprietor (Füüsilisest Isikust Ettevõtja). 22% PIT plus 33% Social Tax on profit (revenue − deductible costs). No retention benefit and no Social Tax deferral — quarterly advance instalments. Generally less optimal than OÜ for IT cases.
- PIT 22% on profit
- Social Tax 33% on profit (no deferral)
- No retention shield
- Basic exemption: €8 400/yr (flat)
Listed for completeness. For most IT freelancers the OÜ retention strategy is materially better.
Official sources for Estonia
The rates and thresholds above are taken from Estonian Tax and Customs Board — 2026 rates.
Figures are estimates for the 2026 tax year and exclude personal circumstances such as joint filing, dependants, regional surcharges and one-off reliefs unless stated above. See how we calculate and the official sources behind these numbers.
Frequently asked questions
Estonia uses a flat 22% income tax rate from 2026 (increased from 20%). Employees benefit from a universal basic exemption of €8 400/year — income up to this amount is completely tax-free. The 22% rate applies to income above the basic exemption. Estonia's tax system is known for its simplicity and digital efficiency.
Employees pay two contributions from their gross salary: 1.6% unemployment insurance (töötuskindlustus) and 2% towards the funded pension (II pillar / II sammas). The employer separately pays 33% social tax (sotsiaalmaks) on top of your gross salary to cover pension and health insurance — this does not come out of your net pay.
Estonian OÜ (limited liability company) owners can distribute profits as dividends. The company pays 22% corporate income tax (tulumaks) on distributed profit. For example, if the company distributes €10 000, CIT is €2 200, and the owner receives €7 800 net. The 22/78 ratio is used in reverse — when calculating the gross cost from a desired net dividend. Dividends received by the individual are not subject to additional personal income tax.
Estonia uses a unique distributed profit taxation model: corporate income tax is only due when profits are distributed, not when earned. Retained profits in the company are tax-free. This encourages reinvestment and is a major reason Estonia ranks highly in international tax competitiveness indices.
Yes — use the Employee mode for standard employment income and the B2B mode for the OÜ dividend model. Note that the OÜ model does not include social security contributions for the owner (owners often pay a minimum salary separately to gain social benefits). The pure dividend model shows only the CIT cost of distribution.
From 2026, the universal basic exemption is €8 400/year (€700/month) for all taxpayers regardless of income level. Previously, the exemption phased out at higher incomes. The new flat exemption simplifies calculation and gives a consistent tax-free threshold to all employees.