Dialogos

Tax Reform Benefits Begin: Lower Taxes, Higher Disposable Income

Published January 22, 2026, 07:02
Tax Reform Benefits Begin: Lower Taxes, Higher Disposable Income

The new tax reform in Cyprus has come into effect, bringing immediate benefits to citizens, families, and businesses. The reform aims for a fairer, more modern, and simpler tax system, tailored to the needs of society and the economy. The tax-free threshold increases to €22,000 for everyone, while tax rates have been reshaped to reduce the tax burden on the middle class. Furthermore, the reform considers family composition, offering tax allowances based on the number of children. Single-parent families are treated favorably, receiving the same allowances as families with two working parents. Tax incentives are also provided for energy upgrades of homes, installation of photovoltaic systems, and the purchase of electric vehicles, as well as tax deductions for mortgage interest or first-home rent and home insurance. For businesses, the tax on dividends is significantly reduced, while certain charges are abolished. The government emphasizes that this reform is a crucial step towards strengthening social cohesion and creating stable foundations for sustainable development. A new digital tool is available to help citizens calculate their personal benefits.