Alpha News

Tax Reform in Cyprus: Lower Taxes, Higher Disposable Income

Published January 22, 2026, 09:40

The new tax reform in Cyprus has come into effect, aiming to reduce the tax burden and increase disposable income for citizens, families, and businesses. The reform is characterized as fairer, more modern, and competitive, with simplified procedures and adaptation to the needs of society and the economy. A key element of the reform is the increase of the tax-free allowance to €22,000 for all taxpayers. At the same time, tax rates have been reshaped, with reduced burden for the middle class. Specifically, rates of 20%, 25%, 30%, and 35% are foreseen depending on the income level. Particular emphasis is placed on the family, with tax allowances for each child. The amount of the allowance varies depending on the number of children and the total family income, with increased limits for families with more children. Single-parent families are treated more favorably. Additionally, the reform provides tax incentives for green investments, such as energy upgrading of homes, installation of photovoltaic systems, and the purchase of electric vehicles, as well as for expenses related to housing, such as mortgage interest and rent. A tax allowance for home insurance is also introduced. For businesses, the tax on dividends is reduced and related charges are abolished, while special rates are established for stock options and cryptocurrencies. The government emphasizes that the reform aims to strengthen social cohesion and create stable foundations for sustainable development. A digital calculation tool has been made available to help citizens see their personal benefit from the changes.