Russia proposes a progressive personal income tax, exempting low earners and raising rates for top incomes. Changes, including dividends, would take effect from 1 January 2027.

RF Report

Russia’s Parliament has put forward a draft federal law aiming to restructure the country’s personal income tax (PIT) system.  Under Draft Law No. 1160313‑8 on 25 February 2026, the reform would exempt low-income individuals from taxation while significantly raising rates for the wealthiest citizens.

The measure also proposes including investment dividends in the general tax base, closing existing loopholes that allowed high earners to avoid progressive taxation.

The draft law sets a new progressive scale for tax residents. Individuals earning up to 12 times the subsistence minimum would pay no tax. Earnings above this threshold would be taxed at rates starting at 13% and rising incrementally, with the top rate of 35% applied to those earning over 500 million RUB. The proposed scale ensures middle-income citizens maintain a 13% rate for earnings up to 5 million RUB, while high earners see increased liability.

Supporters argue the reforms bring Russia closer to international norms, citing top rates of up to 45% in Germany and the UK, and would generate an estimated 474 billion RUB in additional annual revenue while affecting roughly 423,100 taxpayers. If approved, these changes are scheduled to take effect on 1 January 2027.

Proposed PIT Rate Table (Tax Residents)

Annual Income Range PIT Rate Calculation Formula
≤ 12× Subsistence Minimum 0% No tax
>12× Subsistence Minimum – 5,000,000 RUB 13% 13% of the amount
5,000,000 – 50,000,000 RUB 15% 650,000 RUB + 15% of excess over 5,000,000 RUB
50,000,000 – 100,000,000 RUB 18% 7,400,000 RUB + 18% of excess over 50,000,000 RUB
100,000,000 – 250,000,000 RUB 20% 16,400,000 RUB + 20% of excess over 100,000,000 RUB
250,000,000 – 500,000,000 RUB 25% 46,400,000 RUB + 25% of excess over 250,000,000 RUB
Over 500,000,000 RUB 35% 108,900,000 RUB + 35% of excess over 500,000,000 RUB

Key provisions include protection for low-income citizens, inclusion of dividends in the tax base, and the maintenance of a stable rate for the middle class, reflecting a shift toward a more “just” and progressive PIT framework.