Salary Changes and Minimum Wage in Latvia in 2026

Salary Changes and Minimum Wage in Latvia in 2026

At the beginning of January, Laima, the owner of a small IT company, opens her accounting software and notices something has changed: the minimum monthly wage has increased by €40, but the PIT rate still shows 20%. The system asks her to confirm the configuration. If Laima misses this, January salaries will be calculated using the old parameters – and the SRS declaration will be incorrect. Fixing it after the fact costs time, nerves, and late‑payment charges.

⚠️ Important: The old PIT rates of 20% and 23% have not been in force since 1 January 2025. If your system still displays them, that is a configuration error that must be corrected urgently.

This article is written for people exactly like Laima. We summarise all the current payroll requirements for 2026, explain the real impact on costs, and show you exactly what you need to review before each salary run.

Key Takeaways for 2026

• Minimum monthly wage: €780 gross (from 01.01.2026)

• PIT rates: 25.5% up to €105 300/year; 33% above – carried over from 2025

• Non‑taxable minimum: €550/month – only if the employee has submitted a tax book

• Social contributions: employer 23.59%, employee 10.50% – unchanged

What Has Changed and What Stays the Same

Before diving into the numbers, a quick overview is useful. It is also the best test for your payroll software – compare it with your settings.

Key point: The PIT rates of 25.5% and 33% were introduced on 1 January 2025. They remain unchanged in 2026. The only thing that has changed is the minimum wage – €740 has become €780. If your system still uses the old 20%/23% rates, it has not been updated – and that is a configuration error.

Minimum Wage: €780 Gross from 1 January

From 1 January 2026 the minimum monthly wage is €780 gross – €40 more than in 2025. This applies to full‑time work (40 hours per week).

Source: Cabinet Regulations on the Minimum Monthly Wage

The minimum hourly rate is not fixed throughout the year – it varies depending on the number of working hours in a particular month. As a guide, with 160 working hours per month it is approximately €4.88/hour.

In practice, a €40 increase means more than it seems. Employer social contributions are always added on top of the gross salary – so the total cost increase per employee is larger:

Compared to 2025, the total cost increase per employee is €49.43/month or roughly €593 per year. For five employees on the minimum wage – almost €3 000 extra per year. You need to know this figure before budgeting.

Part‑time employees

If someone works 20 hours per week, their minimum is €780 × (20/40) = €390. Review employment contracts where the salary is tied to the old minimum wage or where a fixed amount below €780 is stated for full‑time work – they must be amended.

How Much Is the Minimum Wage “in Hand” in 2026?

In 2026 the minimum net wage in Latvia is approximately €660 per month, provided the €550 non‑taxable minimum is applied and a tax book has been submitted.

For an exact calculation with your own figures, see the salary calculator.

PIT – Rates Carried Over from 2025

Personal income tax rates in 2026 are the same as in 2025. The old 20% and 23% rates have not been in force since 1 January 2025.

PIT rates in 2026

Source: Law on Personal Income Tax, Section 15

The 33% rate only affects very high incomes – above €8 775/month gross. The vast majority of Latvian employees stay within the 25.5% band. The solidarity tax (3%) is applied additionally if annual gross income exceeds €200 000.

How to calculate PIT correctly – the most common mistake

PIT is not calculated directly on the gross salary. The order is strict:

1. Deduct employee social contributions (10.50%) from the gross salary.

2. The resulting amount (minus applicable allowances) is the PIT base.

3. Calculate PIT (25.5%) from the PIT base.

Example, from €1 500 gross:

• Employee social contrib.: €1 500 × 10.50% = €157.50

• PIT base: €1 500 − €157.50 = €1 342.50

• PIT: €1 342.50 × 25.5% = €342.34

If someone calculates PIT directly on the gross (€1 500 × 25.5% = €382.50), that is a mistake – the employee is over‑deducted by €40.16 per month. Over a year that amounts to almost €500 in overpaid tax and an error in SRS reporting. Check the detailed salary calculation with our calculator.

Social Contributions – a Stable System

State social insurance contribution rates have not changed in 2026. This is good news for employers – no need to change settings.

Source: Law on State Social Insurance, Section 18

It is important to remember: the employer’s social contributions (23.59%) are on top of the gross salary, not deducted from it. If the payroll shows a gross of €1 500, the employer pays €1 500 + €353.85 = €1 853.85 in total.

In practice this means: gross salary is almost never the company’s actual cost. With €1 500 gross, the real cost exceeds €1 850 per month.

For more on payroll taxes from the employer’s perspective, see our article on employer payroll taxes.

Non‑Taxable Minimum: €550/month – but Not Automatic

The non‑taxable minimum is a fixed €550 per month (€6 600 per year). However, there is a crucial nuance: it is applied only if the employee has submitted a tax book. Without a tax book, the employer applies a non‑taxable minimum of €0 – and the employee pays significantly more PIT.

💡 If a new employee starts work and does not submit a tax book in time, the first month’s salary will be calculated without the non‑taxable minimum. Explain this to employees already at the hiring stage.

Special groups of persons

Pensioners are entitled to an increased non‑taxable minimum – up to €1 000/month (€500 from employment income + €500 from pension, or €1 000 from pension if there is no employment income).

Ukrainian civilians working in Latvia under the Law on Support for Ukrainian Civilians are entitled to a non‑taxable minimum of €510/month. A certificate issued by the SRS is required, which the employee submits to the employer.

Source: Law on Support for Ukrainian Civilians

Dependant Allowances: +€250 for Each

In addition to the non‑taxable minimum, an employee is entitled to a dependant allowance – €250/month for each dependant (child, spouse with disability, etc., provided the specified criteria are met). The allowance is applied on the basis of the employee’s application and supporting documents.

For example: an employee with one dependant has a total non‑taxable threshold of €550 + €250 = €800/month. This significantly reduces PIT – especially at the minimum wage level, where PIT can drop to almost zero with one dependant.

Net Salary (“in Hand”) in 2026

Approximate calculation with the €550 non‑taxable minimum applied and no additional allowances.

Calculated using 2026 rates: employee social contrib. 10.50%, PIT 25.5%, NTM €550. Employer cost includes gross + 23.59% social contrib.

Practical Salary Calculation – Three Scenarios

The detailed examples below show the tax mechanics in three versions: without the non‑taxable minimum, with the NTM, and with the NTM plus a dependant. This lets you see the real impact of each element on net salary.

Scenario 1 – Minimum Wage (€780)

It is clearly visible: the non‑taxable minimum increases net from €520 to €660 – a difference of €140 per month. With a dependant – another €38 more. Employer costs do not change.

Scenario 2 – Average Salary (€1 500)

For an exact calculation with your specific data, use our salary calculator.

Scenario 3 – Higher Salary (€3 000)

Sick Pay and Holiday Pay

The tax treatment of these two elements differs, and this often raises questions in accounting.

Holiday pay – subject to PIT and social contributions exactly like ordinary salary. No exceptions.

Employer‑paid sick pay (sick leave certificate A) – the employer covers sick pay for the first days of incapacity as specified in legislation (from the 2nd to the 9th day of incapacity). This amount is subject to PIT and social contributions in the same way as salary.

SSIA‑paid sick pay (sick leave certificate B) – subject only to PIT (25.5%), without social contributions. This is paid by the State Social Insurance Agency, not the employer.

In practice: the employer calculates the A‑certificate pay with full taxes, while B‑certificate pay has no social contributions – that is handled automatically by the SSIA.

SRS Reporting: Deadlines

PIT and social contributions must be paid to the SRS by the 23rd of the following month.

Employer’s report (on salaries and taxes) must be submitted in the EDS by the 17th of the following month.

For late payments the SRS automatically calculates late‑payment charges. Delays not only cause financial losses but also worsen the company’s rating in the eyes of the SRS.

Do It Yourself or with a Specialist?

If you do it yourself, make sure: the PIT rates in the software are 25.5% (not 20%/23%), the NTM is €550, and the employer social contribution is 23.59%. These three parameters are the ones most often wrong in systems that have not been updated since 2024.

For information on outsourced accounting costs for a small company, see the separate article.

What Exactly to Review in 2026 – Checklist

1. Check salary compliance with the MW (€780). Part‑time – proportionately. Employment contracts where the salary was tied to the old MW or where a fixed amount is stated must be corrected.

2. Review your payroll system. PIT rate 25.5%, NTM €550. Old 20%/23% rates are an error.

3. Review employment contracts. If they refer to the MW – €780 automatically applies. If a fixed amount is below €780 for full‑time employees – the contract must be amended.

4. Register new employees in the EDS before work begins. Registration after the fact is illegal and can lead to sanctions.

5. Make sure employees have submitted their tax books. Without one, the non‑taxable minimum is €0 – and the employee pays significantly more.

6. In the case of sick pay, distinguish A certificates from B certificates. A certificate – full taxes. B certificate – PIT only.

Frequently Asked Questions

Does the €780 minimum wage apply to all employers?

Yes, without exception. All employers in Latvia – regardless of company size, sector or legal form – are obliged to ensure that an employee’s gross monthly wage is not lower than €780 for full‑time work.

Is the €780 minimum wage also mandatory for micro‑enterprises?

Micro‑enterprise tax (MET) payers do not have a minimum wage restriction for the owner themselves, because tax is paid on the company’s turnover (25%). However, if the company employs workers under the general tax regime, the minimum wage rule is binding on everyone without exception.

Does the 33% PIT affect most employees?

No. The 33% rate only kicks in when annual gross income exceeds €105 300 – that is above €8 775/month. In the Latvian context this is a very high threshold, reached by a small proportion of employees.

Are bonuses and supplements taxed in the same way?

Yes. Bonuses, overtime pay, night work, public holiday work – all are subject to the same social contributions and PIT conditions as basic salary.

How is the part‑time minimum wage calculated?

Proportionately to actual working time. 20 hours/week = €780 × 0.5 = €390. 30 hours/week = €780 × 0.75 = €585.

Are the same rates applied to board member remuneration?

Yes. Board member remuneration (even without an employment contract, on the basis of a mandate) is subject to PIT and social contributions just like salary. If the board member is also a shareholder of the SIA, see also the dividends vs salary comparison.

Are social contributions for the self‑employed the same as for employees?

No. The self‑employed are subject to a different social contribution calculation procedure, not the same rates as employees. For detailed information, see the SRS website on the self‑employed. If a self‑employed person employs workers, the standard rates (23.59% employer, 10.50% employee) apply to those employees’ salaries.

Are the PIT rates new in 2026?

No. The 25.5%/33% system came into force on 1 January 2025. They remain unchanged in 2026. The change happened in 2025 – the switch from 20%/23% to 25.5%/33%.

Is the €550 non‑taxable minimum granted automatically?

No. The employee must have submitted a tax book to that specific employer. Without a tax book, the employer applies NTM = €0.

Conclusion

2026 is not a year of major changes in the payroll field – but that does not mean nothing needs to be done. Two main tasks: check compliance with the MW (€780) and make sure your system still uses the PIT rates introduced in 2025 (25.5%/33%) and the fixed NTM of €550.

The most common mistake we see in our practice: old 20%/23% PIT rates still kept in the system. That is a configuration error that produces incorrect declarations every month and potential penalty sanctions.

If you have questions about salary calculations or setting up your tax system, contact our team. Also try our salary calculator – you can model any gross salary scenario with the current rates.

For questions about your company’s legal structure and tax optimisation, see also the article on the SIA vs IK vs self‑employed comparison – it will help you understand which form minimises your total tax burden in your specific situation.

Legislation and References

• Law on Personal Income Tax, Section 15

• Law on State Social Insurance, Section 18

• Cabinet Regulations on the Minimum Monthly Wage

• Law on Support for Ukrainian Civilians

Would you like an exact salary calculation for your specific situation? Use our salary calculator or get in touch with us – we’ll help you set everything up correctly.

Article prepared in May 2026. Tax legislation changes – before making decisions, consult a certified accountant or contact the Balansis team.