Lithuania’s tax authority has updated its guidance on personal income tax for individual and agricultural activities, clarifying tax credit calculations, effective tax rates, income thresholds and the treatment of farming-related asset transactions from the 2026 tax year.
Lithuania’s tax authority (STI) has updated its commentary on Article 18² of the Law on Personal Income Tax on 15 October 2026. The update reflects three laws passed in 2025: Laws No. XV-343, XV-680 and XV-681. From the 2026 tax year, the commentary sets out how personal income tax (GPM) applies to income from individual activity.
How the standard rate works
The base rate is 20% under Article 6, Part 8 of the law. Taxable income is gross income minus allowable expenses. The tax payable is the calculated tax minus the personal income tax credit (PMK).
The size of the credit depends on the amount earned.
Up to EUR 20,000 euros, the credit equals 15% of taxable income. The effective rate is 5%. A person with EUR 12,000 euros of taxable income owes 600 euros, which is EUR 2,400 of base tax minus a EUR 1,800 euro credit.
Between EUR 20,000 and 42,500, the credit shrinks as income grows. The effective rate rises smoothly from 5% to 20%. At EUR 25,000, the credit is EUR 2,916.67, and the tax payable is EUR 2,083.33 euros. At EUR 30,000, the credit is EUR 2,500 and the tax payable is EUR 3,500.
Above EUR 42,500, no credit applies.
The whole income falls under the general progressive rates in Article 6, Part 1. A person with EUR 52,000 of taxable income (EUR 67,000 gross minus EUR 15,000 in expenses) pays under those general rates.
Agricultural activity and asset sales
Income from individual agricultural activity sits outside the EUR 42,500 cap. So does income from renting, selling or transferring assets used in farming. The base rate here is 15% under Article 6, Part 9, Point 1, minus an agricultural credit.
Persons not registered for VAT get a partial exemption. Their farming income is exempt, but income from selling or renting farm assets is taxable. Someone who earns EUR 8,000 from farming and EUR 15,000 from selling assets pays tax only on the EUR 15,000. That means EUR 2,250 of base tax, less a EUR 1,500 credit, leaves EUR 750 payable.
Up to EUR 20,000, the agricultural credit equals 10% of income, so the effective rate is 5%. Between EUR 20,000 and EUR 35,000, the effective rate climbs from 5% to 15%. A farmer with EUR 25,000 pays EUR 2,083.33 after a credit of EUR 1,666.67.
Above EUR 35,000, the formula produces a negative figure. The credit is then set to zero, and income is taxed at a flat 15%. At EUR 56,000, the tax is EUR 8,400.
Rounding and calculation order
When income exceeds EUR 20,000, the credit is rounded to two decimal places. The steps must follow a fixed order. First, subtract EUR 20,000 from taxable income. Second, multiply that difference by 2 divided by 300,000. Third, subtract the result from 0.15 (or 0.10 for agricultural income).
Last, multiply that figure by total taxable income to get the credit.
