Tax laws changes affecting payroll as of January 1, 2025

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Tax laws changes affecting payroll as of January 1, 2025

By:

Inesa Greičė

19 Dec 20242 min read

Contents

Tax laws changes affecting Payroll as of January 1, 2025

Minimum monthly salary (MMA) is raised to 1038 EUR

We would like to inform that the 28th of August 2024 Government of the Republic of Lithuania ruling No. 709 "Regarding the Minimum Wage Applicable in 2025” comes into force as of 1st of January 2025 where minimal salary is raised by 114 EUR – from 924 EUR to 1038 EUR and the hourly wage – from 5,65 EUR to 6,35 EUR.

This amendment is applied automatically to employees who receive minimum salary or salary lower than 1038 EUR (or respectively lower than hourly rate of 6,35 EUR). Minimum monthly / hourly wage increase will affect the mentioned above employees’ vacation, sick leave pay or any other pay that is calculated with average during the period of January to March, 2025. This decision together with decision below about business trips also will set that per diem pay for trips abroad are tax exempt when employee salary is higher than 1712,70 EUR (before was 1524,60 EUR) or hourly payment is higher than 10,48 EUR / h (10,4775 EUR / h).

Changes in the tax-exempt amount of income (NPD)

Also there are changes in Personal income tax (further – PIT) law articles IX-1007 amendments from which the most relevant to payroll is Article 20. It relates to changes of nontaxable income: the formula used to calculate the tax-exempt amount will be changed since 1st of January, 2025 (two formulas will be

The nontaxable income for the tax period is subject to the following procedure:

1) a person whose monthly income does not exceed the minimum monthly salary valid for current calendar year applies for a monthly nontaxable amount of 747 EUR (remains the same as last year);

2) for a person whose monthly income related to an employment relationship or alike exceeds the minimum monthly salary valid for current calendar year, however, does not exceed 2 387,29 EUR, the following formula is applicable:

- Monthly nontaxable income = 747 – 0,49 x (earned monthly income related to employment relationship – minimum monthly salary applicable for the calendar year).

3) for a person whose monthly income related to an employment relationship or alike exceeds EUR 2 387,29 EUR, the following formula is applicable:

- Monthly nontaxable income = 400 – 0,18 × (earned monthly income related to employment relationship – 642).

Considering the changes of tax-exempt formula, the table below shows PIT calculations from sample salary sums:

For persons who have been assigned 0-25 percent incapacity for work, or persons who have reached the retirement age, have a high level of special needs according to the procedure established by law, or persons who are severely disadvantaged under the statutory procedure, the monthly nontaxable amount is 1 127 EUR. Persons who have been assigned 30-55 percent incapacity to work or persons who have reached the retirement age, who have a moderate level of special needs in accordance with the procedure established by law or mild disability levels – the monthly nontaxable amount is 1 057 EUR. These figures have not changed from the values applied in 2024.

Tax laws changes affecting payroll as of January 1, 2025

Tax laws changes affecting Payroll as of January 1, 2025

Minimum monthly salary (MMA) is raised to 1038 EUR

Changes in the tax-exempt amount of income (NPD)

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