The minimum wage algorithm assumes that it is 45-50% of the national average, with a tendency towards 50%. The algorithm provides a minimum wage of €740 in 2025, €780 in 2026, €820 in 2027 and €860 in 2028. This year, the minimum wage is €700 per month.
There are also plans to simplify the non-taxable minimum, setting it at €510 in 2025, €550 in 2026, and €570 in 2027. In 2028, too, the non-taxable minimum is currently planned at €570, but this could be increased from a budgetary point of view, said Mr Ašeradens. The non-taxable minimum for pensioners is also to be raised from €500 to €650 per month next year.
The government's agreement also provides for the introduction of two rates of personal income tax (PIT), including a 25.5% PIT rate for income up to €105,300 per year, or €8,775 per month, and a 33% PIT rate for income above €8,775 per month.
Currently, the graduated non-taxable minimum is applied to a person's annual income of up to €1,800 at a progressively reduced rate. Employers have long pointed to the complexity of this system and the need to simplify it by moving to a fixed non-taxable minimum for all.
The agreement also provides for an additional rate of personal income tax on income above €200,000 per year, taking into account all income - wages, dividends, capital and others. From 2027, such income could be subject to a further 3% additional rate of personal income tax.
The working parents' allowance is to be increased to 75% (currently 50%) of the parental allowance granted.
The extension of the personal income tax allowance for collective agreements (mobility) to €700 per year is also foreseen.
The proposal also provides for the continued application of a value-added tax (VAT) rate of 12% on fresh fruit, berries and vegetables grown in Latvia.
