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LithuaniaVMI

VMI explains the 2026 monthly and annual tax-free income calculations

The revised Article 20 commentary sets out the EUR 747 monthly allowance, its income-based taper and the annual reconciliation, which can take account of income beyond salary.

By Taxxa AI OyPublished 2 August 2026

Tax

Lithuania’s State Tax Inspectorate (VMI) has restated how the tax-free income amount, or NPD, is calculated for 2026VMI. The ordinary monthly allowance is EUR 747VMI where employment or equivalent monthly income does not exceed EUR 1,153VMI, the minimum monthly wage applicable on 1 January 2026.

Above that income level, the monthly calculation is EUR 747 minus 0.49 times the amount by which monthly employment income exceeds EUR 1,153VMI. VMI illustrates the calculation with monthly gross pay of EUR 1,400: the allowance is EUR 625.97. The commentary distinguishes the income used in this monthly payroll calculation from the income relevant to the annual allowance.

For the ordinary annual allowance, or MNPD, the maximum is EUR 8,964VMI where the relevant annual income does not exceed EUR 13,836VMI. Above that level, the calculation is EUR 8,964 minus 0.49 times the excess over EUR 13,836VMI. VMI states that the ordinary annual allowance is no longer available when the relevant annual income reaches EUR 32,129.88VMI.

Although the allowance is deducted only from employment or equivalent incomeVMI, the annual calculation can take other taxable income into accountVMI, subject to the exclusions in Article 20(7). Consequently, the sum of allowances used in payroll can differ from the allowance established in the annual income-tax returnVMI. VMI explains that the return reconciles tax not recalculated through the employer.

The commentary also preserves separate allowances for eligible people with disabilities. Those amounts apply under the specific disability provisions rather than the ordinary income-based taper. Where an entitlement begins or ends during the tax period, the commentary describes how the corresponding annual amount is apportioned.

VMI identifies the updated explanation in its letter R-2104VMI of 30 July 2026VMI, taking account of the minimum wage and amendments to Article 20. The figures describe the 2026 calculation, rather than an allowance first introduced by that letterVMI.

The legal basis is Article 20 of the Gyventojų pajamų mokesčio įstatymasVMI, as amended by Laws XV-343 and XV-985, and Government Resolution No. 700.

Check the 2026 NPD calculation and reconcile the annual allowance against the relevant income.

Sources