Strategic tax moves for 2025–2026

As 2026 draws closer, Lithuania is entering a period of significant tax reform — with higher personal and corporate tax rates, new progressive brackets, and tightened exemptions. Rūta Bilkštytė, Head of Tax at Rödl & Partner, outlines how individuals and businesses can prepare early, act strategically, and avoid unnecessary tax burdens while staying fully compliant.

The article in Lithuanian might be downloaded here

What to do now (Before 2025 ends)

Pay out bonuses in 2025

Starting in 2026, a new 25% income tax bracket applies to annual income between 36 and 60 average monthly wages (≈ EUR 82,962–EUR 138,270). If you or your employees fall into this range, bonuses are cheaper tax-wise when paid this year.

2. Settle voluntary health insurance payments before 2026

From 2026, only up to €350 per year in employer-paid health insurance premiums will remain tax-free (down from the current 25% of annual salary). Paying larger contributions this year avoids extra tax later.

3. Insure property before 2026

A new security contribution will make non-life insurance more expensive next year, as insurers will likely pass new 10% fees on to clients.

4. Sell property strategically

From 2026, capital gains on real estate will be taxed under a new progressive system, but the non-taxable ownership period shortens from 10 to 5 years.

If you have owned your property less than 5 years, sell it this year.
If more than 5, it is better to wait until after 2026.

5. Farmers: consider selling harvests in 2025

Agricultural income will no longer be taxed separately from 2026. This year, it is still subject to a flat 15% rate regardless of income level.

What to Plan for Later

1. Establish a new company in 2026, not 2025

New companies set up in 2026 (with annual revenue below €300,000) will enjoy a 0% corporate income tax rate for their first two fiscal years — previously only one. The employee limit (10 people) will also be removed.

2. Defer larger investments to 2026

Since corporate income tax rates will rise (from 16% → 17% and from 6% → 7%), expenses recorded in 2026 will bring higher tax deductions.

The Takeaway

Rūta Bilkštytė emphasizes that careful timing — when you pay, invest, or establish a company — can make a major difference to your overall tax burden. With progressive rates and tighter exemptions coming in 2026, 2025 is the year to act smart, plan ahead, and avoid surprises.

Contact

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Rūta Bilkštytė

Head of Tax Department

+370 5 212 35 90

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