14/01/2026
The Cyprus Parliament approved the tax reform which comes into force on 01 January 2026.
Tax-free threshold increased from €19,500 to €22,000.
The new personal income tax brackets are as follows:
- €0 to €22,000 - 0%
- €22,001 to €32,000 - 20%
- €32,001 to €42,000 - 25%
- €42,001 to €72,000 - 30%
- Above €72,000 - 35%
As per the new Cyprus Tax Reform on the Personal Income Tax, individuals are entitled to additional tax deductions based on the Gross Family Income (Husband’s and Wife’s total income). The income criteria are as follows.
Families
- €100,000 for families without children or with one (1) or two (2) children
- €150,000 for families with three (3) or four (4) children
- €200,000 for families with five (5) or more children
Single parents
For single parents the same Gross Family Income criteria apply, and the deduction is doubled to the parent of the child. For example, if the gross income of the single parent with three kids is not above €150,000, then a deduction of €7,500 (€2,000 for the first child, €2,500 for the second child and €3,000 for the third child) is applied.
Single persons
Single persons, i.e. individuals living without dependent children and without a spouse or partner in a Civil Cohabitation, must have a total gross income not exceeding €40,000. Persons residing or cohabiting with other persons, other than the aforementioned, are still considered single persons.
Personal tax deductions
1. Child deductions per parent
Based on the Gross Family Income criteria (above), according to the number of dependent children in the family, each spouse is entitled to a tax allowance as follows:
- €1,000 for the first child
- €1,250 for the second child
- €1,500 for the third and subsequent children
Note that the requirements for a child to be considered as dependent are as follows:
- Under the age of 18
- Student under the age of 18
- Military service under the age of 20
- University student under the age of 24
- Children who are permanently incapable of self-support, regardless of age
2. Housing loan interest or rent
Based on the Gross Family Income criteria (above), each spouse is entitled to a tax allowance of up to €2,000 on:
- Interest on a serviced housing loan (regular repayments) for the purchase or construction of a main residence in Cyprus. A serviced loan also includes a restructured loan on which the instalments are paid continuously, up to and including 31 December of the tax year.
- Rent paid for the use of a main residence in Cyprus.
3. Green Investments
Based on the Gross Family Income criteria (above) , each spouse is entitled to a tax allowance of up to €1,000 when capital expenditures are incurred for:
- improving the energy efficiency of the main residence in Cyprus,
- technical energy efficiency systems, renewable energy systems, as well as electricity storage batteries, in the main residence in Cyprus,
- Purchase of an electric vehicle registered with the Department of Road Transport
4. Home Insurance against natural disasters
The tax reform introduces a deduction without income criteria for owners of any residence in Cyprus (e.g. main, holiday or rented to a third party) who take care of insuring their property. The deduction concerns insurance premiums paid from 1.1.2026 for insuring the residence against natural disasters (such as fire, earthquake, flood, etc.), up to the total amount of €500 for all residences, for each tax year.
As of 1 January 2026, the payment of Special Defense Contribution on rental income is abolished. Rental income continues to be taxed with income tax and with a GHS contribution.
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