How wages are taxed

Wage income earned in Lithuania is taxed at an income tax rate of 20%*.

Lithuanian companies must calculate, withhold and pay 20% income tax to the budget of the Republic of Lithuania when paying wages.

For information on compulsory health insurance contributions and state social insurance contributions, please refer to Sodra.

Please note that sickness benefits (including those paid by the employer for the first two days of sickness) are taxed at an income tax rate of 15%.

Important: wages paid by companies for work in Lithuania are taxed from the first euro, i.e. the company does not apply the tax-exempt amount of income (TEAI) during the year. The right to TEAI can only be realized at the end of the calendar year.

* Part of annual wage income and payments made to members of the Management Board and Supervisory Board not exceeding the amount of 60 average national wages per year (hereinafter referred to as “ANW”) (60 ANWs in 2024 amounted to EUR 114,162; 60 ANWs in 2023 amounted to EUR 101,094; 60 ANWs in 2022 amounted to EUR 90,246; 60 ANWs in 2021 amounted to EUR 81,162), or 84 ANWs in 2020 (therein amounted to EUR 104,277.60), is taxed at an income tax rate of 20%. If it exceeds 60 ANWs or 84 ANWs in 2020, then the part in excess is taxed at an income tax rate of 32%.