Middle-class taxpayers and families -especially those with three, four, or more children- will be most benefited by to the new tax cuts unveiled by the Prime Minister at the Thessaloniki International Fair (TIF) on Saturday.
The cuts focus mainly on direct taxes, especially for families with children. VAT will also be reduced by 30% in at least 20 Aegean islands. Property owners and income earners will see tax rate reductions of up to 10 points.
Freelancers will also benefit from the new measures. For the first time, those with three or more children will receive tax relief for dependents.
Even freelancers taxed under imputed income rules will see their burdens canceled if they have at least three children.
Specifically, from January 1st, 2026, under the new tax scale:
- Professionals with three children will save €1,300 annually if taxed on €20,000 income, offsetting much of the burden from imputed taxation.
- Those with four children will enjoy a €20,000 tax-free threshold in 2026 (currently zero).
- For salaried workers and pensioners, the benefit is even greater, as they keep existing child tax deductions. For example: €27,100 tax-free income for four children, €29,000 for five children, and more than €30,000 for six children. This means many who were taxed on €10,000–15,000 of imputed income despite declaring zero earnings will now owe no tax at all.
For the first time in Greece, income tax will not only depend on earnings but also on age. The Prime Minister announced a new tax scale for young people:
- All taxpayers under 25 will pay no income tax unless they earn more than €20,000 annually. Students and young workers will no longer face tax or imputed income burdens.
- Taxpayers aged 26–30 will pay only half the normal tax rate. For this five-year period, income tax and payroll withholding will be reduced by up to 60%. The first €20,000 of income will be taxed at 9% instead of 22%.
All taxpayers will gain from additional measures, including:
Lower tax rates by 2–5 points: Savings start at €200 for incomes of €20,000, reaching €1,600 for incomes above €60,000.
- Families with one child save €400–2,000.
- Families with two children save €600–2,400.
- Families with three children save €1,300–3,800.
- Families with four children save €1,800–5,300, with even higher savings for larger families.
New measures
- 30% reduction in imputed values for cars and homes.
- Two-year exemption from imputed income for mothers with a newborn child.
- 50% reduction in ENFIA property tax for primary residences in villages.
- 30% VAT reduction in 19+ Aegean islands.
- 50% reduction in imputed income for professionals in small villages and settlements.
Additional measures include pension increases (half in 2026, full in 2027), new housing policies, wage increases for Armed Forces personnel, one month’s free rent support, and a €250 annual bonus for pensioners, starting October–November 2025 and recurring permanently each year.
Fiscal cost of the new tax cuts
According to the General Accounting Office, the new tax relief package will cost the state €1.25 billion in 2026 (mainly due to reduced payroll withholdings starting in January). The cost will rise to €1.6 billion in 2027, once reduced assessments are issued for professionals’ 2026 incomes.
Overall, the full Mitsotakis package will cost €1.75 billion in 2026, reaching €2.5 billion annually from 2027 onwards, once all measures are fully implemented.
