According to income and social tax declarations submitted to the MTA, 83 percent of people whose employers make salary payments have utilized the tax-free income allowance. "For 17 percent of wage earners, the tax-free allowance has not been applied to their monthly wage," said board spokesperson Andri Küüts.

However, this does not mean those people are losing their income tax exemption, he added. "Next year, when 2026 income is declared, the Tax and Customs Board will refund the overpaid income tax on the unused tax-free income," Küüts noted.

At the start of this year, a system where the tax-free income allowance depended on a person's income level ended, and was replaced by a monthly tax-free allowance of €700 applied universally to all wage earners. This change did not significantly alter lower wage earners' income, if at all; higher earners generally saw an increase in income as a result of the change.

The MTA says during the first quarter of 2026, Estonian wage earners accrued between €293 million and €300 million in tax-free income each month, rising each month: In other words, the sum on which no income tax was paid. Earners' income tax liability fell by €64.5 million-€66 million a month in the first quarter, as a result of the change.

The MTA reports the number of recipients of tax-free income remained between 446,000 and 456,000 people in each of the first three months of 2026, making the average income tax exemption per person around €660 a month.

During the same three months in 2025, the amount of tax-free income applied was around €125 million each month. In other words, in the first quarter of last year, earners retained €27.5 million from the income tax exemption, making for a total of €37 million-€39 million more in earners' bank accounts each month.

Following the logic of the tax cut, this has again largely benefited higher-income earners.

The number of recipients of tax-free income was between 258,000 and 261,000 people per month January-March 2025, giving an average applicable income tax exemption of about €480 per month.

In other words, 191,500 more people have been able to make use of a nearly €200 bigger income tax exemption in the first quarter of 2026, compared with the same period in 2025.

In the explanatory memorandum attached to the 2026 state budget, the Ministry of Finance forecast total personal income tax revenue for this year will fall by €500 million on the year, due to the abolition of the so-called "tax hump," also known as bracket creep, and the introduction of the uniform €700 income tax-free allowance.

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