Estonia payroll taxes in 2026: social tax, withholding and deadlines

The components

Estonian payroll taxes fall into two groups: what is withheld from the employee, and what the employer pays on top. The employer withholds income tax at 22%, unemployment insurance at 1.6% and the funded pension from the employee's gross pay. On top of the gross, the employer pays social tax at 33% and unemployment insurance at 0.8%. For the total cost, see what an employee costs in Estonia.

Withheld from the employee

• Income tax at 22%, on gross pay after the basic exemption (if the employee applied for it) and after the employee's unemployment insurance and funded pension contributions.
• Unemployment insurance contribution at 1.6%.
• Funded pension contribution (the second pension pillar) at 2%, 4% or 6%, as the person has chosen.

Paid by the employer on top

• Social tax at 33% of gross pay.
• Unemployment insurance contribution at 0.8% of gross pay.

The minimum social tax obligation

The minimum social tax in 2026 is €292.38 a month per employee, which is 33% of the minimum monthly base of €886 set by law. This rule often surprises small employers. Social tax is calculated on that base even when the actual salary is lower. There are limited exceptions, for example when an employee works for several employers or is employed for only part of a month. In most cases, though, a part-time or low-paid employee still triggers the minimum.

The basic exemption in 2026

The basic exemption in 2026 is a flat €700 a month, or €8,400 a year, for people of working age. It is the part of income that is not taxed. It applies only if the employee has given the employer a written application. For people of retirement age it is €776 a month. From 1 January 2026 it no longer gets smaller as income rises.

Board member fees

Board member fees carry income tax and social tax, but no unemployment insurance contributions. A board member is not an employee, so the employment contract and the employment register entry do not work in the same way. Fees paid to non-resident board members raise tax treaty questions. They go on a separate annex of the TSD, the monthly payroll tax return.

Fringe benefits

Fringe benefits are taxed at the employer's expense. In plain terms, if the company gives an employee something other than money, the company pays the tax on it. The employer pays income tax and social tax on the grossed-up value and declares both on the TSD annex. Examples are a company car available for private use, a paid mobile phone, accommodation, and certain health and sports costs above the tax-free limits.

Deadlines

The TSD and the payroll taxes are due by the 10th day of the month after the payment.

• Employment register entry: before the employee starts work.
• Payroll tax follows the payment date, so a December salary paid in January falls under the new year's rules.

If you would rather we did it, our payroll service runs the monthly payroll and the TSD, from 15 EUR.

The minimum wage

The national minimum wage is €946 a month from 1 April 2026, up from €886. The rise starts in April, so the first quarter of 2026 uses the previous figure.

Sickness benefit

From 1 January 2026, the temporary incapacity benefit paid from the ninth day of illness is capped at €126.87 a day. The employer's obligation for the earlier days of sick leave has not changed.

Frequently asked questions

TagsEstonian social taxTSD declarationpayroll taxes Estoniaemployer cost Estonia

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