Lithuania changed its income tax in 2026, and a great many guides, including some official-looking ones, still describe the old system. If you read that it is "20% and 32%", you are looking at 2025. There is now a middle rate.
This article gives the picture of income tax in Lithuania for someone who has just arrived. For your personal case, the tax office (VMI) or an adviser has the last word.
When are you a tax resident for income tax in Lithuania?
You are a tax resident if your permanent home or the centre of your personal, social or economic interests is in Lithuania, or if you spend 183 days or more in a calendar year. The personal income tax law also has a test of 280 days or more over two consecutive tax years, provided you spent at least 90 days in Lithuania in one of them. One criterion is enough. Every day counts, including holidays and the days of arrival and departure.
Note the trap: a declared home in Lithuania counts among the criteria, even with fewer days (residence in Lithuania). Residents declare income from all over the world, then apply the tax treaty with their home country.
What are the 2026 rates of income tax in Lithuania?
Since 1 January 2026 the personal income tax (gyventojų pajamų mokestis, GPM) has three rates on employment and similar income, according to the tax office:
| Annual income | Rate |
|---|---|
| Up to 36 average wages | 20% |
| 36 to 60 average wages | 25% |
| Above 60 average wages | 32% |
With the 2026 average wage used by Sodra and the EU tax database (€2,312.15 a month), that gives €83,237.40 and €138,729 a year. Before 2026 the rates were 20% up to 60 average wages and 32% beyond.
Other rates apply elsewhere. A rate of 15% applies to dividends, sickness, maternity and childcare benefits and certain capital gains, whatever the amount. Income outside employment is taxed at 15% up to 12 average wages a year. Interest has a €500 annual exemption (2026). Check which category your income belongs to with VMI.
How does the tax-free allowance work?
The neapmokestinamasis pajamų dydis (NPD) is a tax-free amount that applies only to employment and similar income. In 2026 it is at most €8,964 a year (€747 a month), if your annual income does not exceed 12 minimum wages (€13,836 in 2026, with a minimum wage of €1,153 a month). Above that, it falls by 0.49 euro for each euro of extra income, and disappears around €32,130 a year. Your employer applies it monthly. From 2027, an extra allowance of €1,044 per child is announced for employees, or a €208.80 tax credit per child for the self-employed.
Keeping income in your home country, or unsure which tax treaty decides who taxes your pension or rental income? Moovy can set out the questions to ask the tax office and draft the email, in Lithuanian with an English version.
How do you file your annual return?
Your employer withholds income tax, social contributions and health insurance from your salary each month, using your personal code (Lithuanian personal code). You still file a yearly return for the previous year, online, in the VMI's electronic declaration system (EDS). The date is before 1 May of the following year, according to the EU tax database (2026); EURES gave 2 May in 2025. It can shift when 1 May is a holiday, so check every year.
To log in you need Lithuanian electronic identification, for example your bank or mobile signature (Lithuania e-services). Keep certificates of foreign income and, if needed, a certificate of tax residence from your home country.
What about property and capital gains?
Selling a property: from 2026 the gain is exempt after five years of ownership (ten before). The main home follows a separate rule: it is exempt if it was declared as your home for the last two years, or if the sale price is used to buy another home within the year (EU tax database).
Annual property tax in 2026: your main home is taxed only if its value exceeds €450,000, with a municipal rate of 0.1% to 1%. Other non-commercial property is taxed above €50,000: 0.2% from €50,000 to €200,000, 0.4% up to €400,000, 0.6% up to €600,000, 0.8% up to €1,000,000 and 1% above. Commercial property is taxed between 0.5% and 3%, depending on the municipality. See buying property in Lithuania.
Which mistakes should you avoid?
- Using an outdated scale. There is a 25% band since 2026.
- Thinking 183 days is the only test.
- Forgetting foreign income.
- Looking for a special new-resident regime. There is none; the €4,727.30 relocation aid is a narrow grant (shortage occupations, a permanent contract, at least five years of previous non-residence), paid after six months of work.
- Leaving your address declared when you leave. You can remain a tax resident and owe health contributions.
The scale for self-employed people is different, and is covered in self-employed in Lithuania.
How does Lithuania tax residency of 183 days work in practice?
If you move in March and work through to December, you pass 183 days in the calendar year and are resident for that year. If you arrive in September, rent a flat and declare an address, you will probably have fewer than 183 days in the first year, but the declared home can still make you resident. Count your days and your address together.
Every day counts, including holidays and the days of arrival and departure. If your home country also treats you as resident, the tax treaty between the two countries decides which one taxes what. Treaties are listed on vmi.lt and on your own tax authority's site; the French treaty can be read on impots.gouv.fr, and the Swiss one (signed 27 May 2002) on fedlex.admin.ch. For the United Kingdom, ask HMRC.
What happens to your income tax in Lithuania if you work for a foreign employer?
A Lithuanian tax resident declares worldwide income. If your employer is abroad and does not withhold Lithuanian tax, you declare the income yourself in the annual return and apply the treaty to avoid double taxation. Keep your payslips and any certificate of tax paid abroad. This is a point where the details matter: before you decide, have your case confirmed by the VMI or a Lithuanian tax adviser.
Is there a tax break for newcomers?
No regime reserved for new arrivals appears on the VMI or Invest Lithuania pages. The €4,727.30 relocation grant is for certain specialists in shortage occupations: a gross average salary of at least 4.1 times the minimum wage for the first six months, an open-ended contract with a Lithuanian company, and at least five years of non-residence before. It is paid after six months of work (Invest Lithuania, Ministry of Economy). Treat any website that promises a "new resident tax holiday" with suspicion.
What other taxes should you expect?
VAT is 21% at the standard rate, with reduced rates for some goods and services, and self-employed people have their own scale (self-employed in Lithuania). Pensions are not subject to income tax, with narrow exceptions (retiring in Lithuania). Interest above €500 a year is taxed.