Greece announces €1.6 billion in tax cuts for the middle class

Greek Prime Minister Kyriakos Mitsotakis, a conservative, announced this Saturday a tax reform to ease the tax burden on the middle class, especially families with children, totaling €1.6 billion, starting next year.

" The time has come for the middle class," Mitsotakis said, presenting the plan to reform the tax system during a speech at the Thessaloniki International Fair. According to the president, the plan can be financed thanks to strong economic growth, a larger-than-expected budget surplus, and improved tax collection.

The proposed reform, which is due to take effect on January 1, 2026, includes a two-percentage-point reduction in all rates levied on each income tax bracket, except for the main rate on the first 10,000 euros, which remains at 9%.

There will also be an additional two-point reduction for each dependent child, a measure intended to boost the birth rate to alleviate the severe demographic crisis the country is facing.

"An individual earning 20,000 euros a year will have an annual benefit of 600 euros if they have two children , 1,300 euros if they have three, and 1,680 euros if they have four," the president said, adding that if both parents have this income, "it's clear that the benefit is double."

In the second bracket of the tax scale (between 10,000 and 20,000 euros), the tax is reduced from 20% to 9% for taxpayers with three children (18% and 16% for those with one or two, respectively) and will be zero for those with four or more children.

According to the head of government, in power since 2019, the reform will benefit some four million individuals, especially families with one or more children and young people taking their first steps into the labor market.

The tax on the third income bracket (between 20,000 and 30,000) is thus reduced from 28% to 26%, a rate from which two more percentage points are subtracted for each dependent child.

On the other hand, young workers, up to the age of 25, with an annual salary of up to 20,000 euros will not pay income tax, as a 0% rate will be introduced for them, the prime minister promised, emphasizing that this is "an unprecedented decision" in Greece "in favor of the new generations."

The tax on the second income bracket for young people between 25 and 30 years old will be reduced from 20% to 9%.

On the other hand, the reform will include a reduction in the rental rate when the tenant's income does not exceed 24,000 euros per year.

"We actively support the Greek family, not only because it's the right thing to do, but because in doing so we add another arrow to our arsenal in the fight against the demographic problem," Mitsotakis emphasized.

This is the first permanent reduction in Greek income tax rates following the severe cuts and tax increases implemented during the country's sovereign debt crisis between 2010 and 2018.

The prime minister asserted that his plan constitutes "the boldest reform of the income tax system" since democracy returned to Greece in 1974.