Starting January 1, 2026, Cyprus will officially turn the page on how it taxes income and businesses.
After 23 years under a tax system that had to be repeatedly tweaked to keep up with the times, the House of Representatives on Monday voted to usher in a brand-new tax framework that will shape how the country operates going forward. There are plenty of moving parts in the reform, but for most people, a few key changes stand out.
First, the tax-free income threshold is going up from €19,500 to €22,000. Beyond that, income tax brackets are being adjusted as follows: Income from €22,001 to €32,000 will be taxed at 20%, from €32,001 to €42,000 at 25%, from €42,001 to €72,000 at 30% and income above €72,001 will be taxed at 35%. Families with children will also see meaningful tax relief.
The reform also introduces new deductions aimed at easing everyday costs. These include a €1,000 tax exemption per spouse or partner for housing and green-related expenses.
In addition, rent payments and interest on a serviced housing loan will be tax-exempt up to €2,000 per year for each spouse or partner.