The 2026 budget seeks to increase revenue through excise taxes while helping reduce household costs by implementing a temporary VAT reduction on essential food items starting July 2026.
Latvia’s parliament (Saeima) has adopted the 2026 State Budget on 4 December 2025.
The 2026 State Budget focuses on strengthening security, supporting families, and advancing sustainability, cutting EUR 844.1 million in planned spending and redirecting those funds to deliver roughly EUR 700 million in additional investment for security, family support, and education in the coming year.
The 2026 budget does not introduce increases to basic taxes. It provides a temporary one-year reduction in the VAT rate on essential food items, including bread, milk, eggs, and fresh poultry, effective from 1 July 2026.
The budget also approved a EUR 40 increase in 2026, raising the basic personal allowance to EUR 550 and the minimum monthly wage to EUR 780. Furthermore, it is increasing the excise tax rate on demerit goods such as tobacco and alcohol to safeguard public health.
Earlier, Latvia’s government approved the 2026 state budget measures on 14 October 2025 and the medium-term budget framework for 2026–2028, prepared in line with European Union (EU) and national fiscal discipline rules.
