The 2026 budget aims to boost revenue through excise taxes while easing living costs via a temporary VAT reduction on essential foods from July 2026.
Latvia’s government has 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.
This development follows Latvia’s Finance Minister having initiated discussions with social partners and government representatives regarding the 2026 draft budget and associated tax proposals on 19 September 2025.
The consolidated state budget revenue for 2026 is planned to be EUR 16.1 billion, while expenditure is intended to be EUR 17.9 billion.
The government is not raising basic taxes and is reducing the VAT rate on essential food products such as bread, milk, eggs, and fresh poultry for one year, beginning on 1 July 2026.
The government is focused on enhancing security and support for families.
The government 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.
