Explanation of the Amendment

As part of the Cyprus tax reform, the individual income tax bands have been revised, increasing the income thresholds for personal taxation.

The amendment reflects current economic conditions and aims to respond to the financial needs of households by increasing the tax-free income threshold and adjusting the tax brackets.

In particular:

• The tax-free income threshold increases from €19,500 to €22,000.

This change reduces the tax burden for individuals with low and middle income levels.

New Personal Income Tax Bands (From Tax Year 2026)

Technical Clarification

The revised tax bands apply to individual taxable income from the 2026 tax year onwards.

Income tax in Cyprus continues to apply on a progressive basis, meaning that each tax rate applies only to the portion of income falling within the respective band.

Example – Tax Calculation

If an individual has chargeable income of €50,000, the tax is calculated as follows:

• €0 – €22,000 → 0% = €0

• €22,001 – €32,000 → 20% = €2,000

• €32,001 – €42,000 → 25% = €2,500

• €42,001 – €50,000 → 30% = €2,400

Total tax payable: €6,900

Commentary – Policy Rationale

The revision of the individual tax bands aims to reduce the tax burden on households, particularly for individuals with low and middle income levels.

The increase in the tax-free threshold also reflects the need to adjust the tax system to current economic conditions and the rising cost of living.

Related Rightax Publication – Cyprus Income Tax System

For a broader overview of corporate and individual income taxation in Cyprus, including the general tax framework, applicable tax rates and key rules affecting businesses and individuals, see our detailed guide:

👉 Corporate and Individual Income Tax in Cyprus

This guide explains the overall Cyprus income tax system, while this publication focuses specifically on the revision of the individual tax bands introduced as part of the Cyprus tax reform from 2026.