How we calculate Latvian net pay

The calculator follows the Law on Personal Income Tax and the Law on State Social Insurance, as the State Revenue Service (VID) applies them to salaries. Rates and amounts come from the consolidated laws and VID guidance — see data sources.

Social insurance

The compulsory social insurance rate is 34.09%: 10.5% is withheld from the employee's pay and 23.59% is paid by the employer. Contributions are capped at income of €105,300 a year (2025 to 2027). Above it, contributions are still withheld during the year, but they become solidarity tax at 25%; VID refunds the difference after the year. We do not add that refund to net pay.

Non-taxable minimum and reliefs

The non-taxable minimum is the same for everyone: €510 a month in 2025 and €550 in 2026 (€570 from 2027). The relief for each dependant is €250 a month. During the year they are applied only by the employer holding the employee's tax book; otherwise they can be claimed in the annual return.

Payroll tax

Employee contributions, the non-taxable minimum and reliefs are deducted from gross pay, and 25.5% is withheld from the rest. The employer applies a single rate during the year, whatever the pay. Amounts are rounded to the cent, as in the VID example.

Annual income tax return

Annual taxable income up to €105,300 is taxed at 25.5%, and above it at 33%. Where total annual income exceeds €200,000, another 3% is due on the excess. The difference from the tax withheld is refunded or paid. The estimate assumes the same pay every month and no other income or deductible expenses.

Employer cost

Employer cost is gross pay plus 23.59% contributions. If an employee's contribution base for a quarter is below three monthly minimum wages (€740 in 2025, €780 in 2026), the employer pays compulsory contributions on the difference; we spread this over the month assuming equal pay. The law has exceptions, for example for people of pension age, people with disabilities and pupils or students under 24. The business risk state fee is not included.

Tests

Not yet included

• The non-taxable minimum for pensioners and people with disabilities, and extra reliefs.
• Deductible expenses (education, medical care, private pension funds, life insurance) in the annual return.
• Several employers, royalties, micro-enterprises and self-employment.
• The business risk state fee and exceptions to the minimum contribution base.
• How the solidarity tax overpayment is split and refunded.

Estimates only. Not tax, legal or financial advice.