Overall, expenses will increase by €1.4 billion and investments by €0.4 billion.

Of the total budget, €19.6 billion is defined as expenses, which will rise by 7.7 percent (€1.4 billion). Planned investments amount to €1.3 billion, 44.4 percent (€0.4 billion) more than in 2025.

Budget revenues are expected to increase by 5.1 percent (€0.8 billion) compared to this year, reaching €18.6 billion.

The government is forecasting a deficit of €1.6 billion, but due to unexpectedly strong tax receipts, it will likely be smaller.

However, the gap between revenues, expenses, and investments next year will reach €2.3 billion, 64.3 percent larger than planned in 2025.

Much of the additional money will be spent on defense and salary rises.

Defense has been allocated €845 million, which is 46.9 percent of the extra funding for investments.

Some public sector employees – such as teachers, rescuers, police officers, cultural workers, and special care staff – will see their salaries rise by up to 10 percent. This will cost €117 million, or 6.5 percent of the additional funding.

The government is also planning to scrap the two-percentage-point income tax increase and introduce a standard tax-free minimum income of €700 for all citizens. This will reduce state budget revenues by €780 million.

Without these tax cuts, the deficit would be €1.52 billion instead of €2.3 billion. It would have risen by 8.6 percent rather than 64.3 percent.

The Ministry of Finance said Estonia's net debt burden will increase by €1.6 billion next year. National debt will reach 25.9 percent of GDP, having grown sharply over the last five years.

The draft of next year's state budget is expected to be made public on Wednesday, September 24.

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