From 1 January 2026, significant changes are being introduced to the taxation of employment income in Greece, affecting employees and payroll processing.
According to Article 15 of the Greek Income Tax Code, the new provisions revise the personal income tax scale and introduce additional tax reliefs for specific categories of employees.
These tax changes directly impact payroll withholding, net earnings, and the calculation of the Withholding Tax on Salaries (Greek payroll withholding), without increasing employers’ total payroll cost. Below, we outline the key points and explain what these changes mean in practice.
New Personal Income Tax Scale from 2026
As of tax year 2026, the personal income tax scale for individuals is being amended, introducing changes that directly impact employee taxation and payroll withholding. The new framework includes reductions in tax rates for specific income brackets, a restructuring of intermediate tax brackets, the retention of the top tax rate for very high income levels, and enhanced tax reductions linked to family status and dependent children. These adjustments affect how personal income tax is calculated for employees and are reflected directly in payroll tax withholding from 2026 onwards.
Additional Tax Reliefs for Employees
In addition to the revised tax scale, further tax reductions are introduced from 2026 for specific groups of employees, directly affecting monthly payroll withholding. Employees with dependent children benefit from reduced tax rates, with significant tax relief available for large families, while employees up to the age of 25 are subject to zero income tax on annual income of up to €20,000. In parallel, employees aged 26 to 30 are taxed at a reduced rate of 9% on the portion of income between €10,000 and €20,000. These measures are designed to provide targeted tax relief to younger employees and families with increased financial responsibilities.
Impact on Payroll and Withholding Tax
The new tax scale is implemented through payroll withholding, directly affecting monthly salary calculations and the way employment income is taxed. In practice, the amount of tax withheld from employees’ salaries is reduced, resulting in higher net earnings, while the gross salary remains unchanged, provided no other salary adjustment applies. All changes are automatically reflected in payroll calculations from 2026 onwards, in line with updated withholding tax rates, without requiring any action from employees.
What the Changes Mean for Employers
From the employer’s perspective, the new tax provisions introduced from 2026 do not increase payroll costs, as employer social security contributions remain unchanged and the overall gross payroll cost is not affected. The changes relate exclusively to the taxation of the employee’s income through payroll withholding. As a result, employees receive higher net earnings due to lower withholding tax, while employers do not face any additional financial burden.
Implementation Timeline
The tax changes apply to income earned from 1 January 2026 onwards and will be automatically incorporated into payroll processing through updated withholding tax rates, in line with instructions issued by the tax authorities.
Conclusion
The 2026 tax changes introduce a revised framework for the taxation of employment income, directly impacting payroll withholding and net salaries while maintaining stability in employer costs. Understanding these developments is essential for both employees and employers to ensure smooth payroll implementation and effective financial planning.
Our team closely monitors tax and payroll developments and remains available to provide guidance and clarification on how these changes apply in practice.
The program’s pre-publication is available on the official website:
http://elib.aade.gr/elib/view?d=/gr/act/2025/5246/
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