Wage Increases for One Million Private Sector Workers This Week

This week marks a significant pay boost for approximately one million private sector employees, as revised direct tax scales come fully into effect. The changes result in lower monthly income tax withholdings, effectively increasing net salaries and providing immediate financial relief. Public sector workers have already seen these benefits due to advance salary payments. The tax reform, introduced by Finance Minister Kiriakos Piertakakis and Deputy Minister Thanos Petralias and passed in November, is described by ministry officials as the largest reduction in direct taxes since the restoration of democracy. Tax rate reductions range from 2 to 8 percentage points for most workers, reaching up to 22 points for large families. The extent of reduction depends on taxable income, number of dependents, and employee age. The reforms particularly benefit middle-income households, families with children, and young employees. Notably, individuals under 25 now face zero income tax, while those under 30 pay a 9% rate on annual incomes up to €20,000. Multichild families earning up to €20,000 are also exempt, and three-child families see reduced rates starting at 9%. The fiscal cost is estimated at €1.2 billion in 2026, rising to €1.6 billion in 2027, and stabilizing at €1.53 billion from 2028 onward. Around four million taxpayers, including public and private employees, retirees, freelancers, and farmers, stand to benefit.