Prime Minister of Greece, Kyriakos Mitsotakis, unveiled sweeping income tax cuts worth €1.6 billion ($1.88 billion) during his annual economic policy speech at the Thessaloniki International Fair.
The reforms target families with children, young workers, homeowners, and retirees, as the government seeks to counter a prolonged cost of living crisis and declining public approval.
“Fiscal stability is the foundation of our policy,” Greek PM Mitsotakis said, stressing that growth dividends should return to citizens through lower taxes rather than handouts. He noted that his administration has already eliminated 72 levies and pledged the boldest income tax reform since Greece’s transition to democracy in 1974.
Key Tax Reforms
- Lower rates for families: For incomes between €10,000–20,000 ($11,719–23,438), tax rates will drop from 22% to 18% with one child, 16% with two children, 9% for three children, and zero for larger families. A household with three children and €20,000 ($23.438) income will save about €1,300 ($1,523) annually.
- Middle-income relief: For earnings between €40,000–60,000 ($46,876–70,314), a new 39% bracket replaces the current 44%.
- Youth tax exemption: Workers up to 25 years old with annual earnings of €20,000 ($23,500) will pay no income tax, saving up to €2,480 ($2,910).
Housing & Property Measures
Also, Greek government introduced a new 25% tax rate on rental income between €12,000–24,000 ($14,062–$28,125), alongside plans to build 2,000 apartments on former military sites—25% reserved for armed forces personnel and 75% for citizens without a first home.
Mitsotakis also pledged to halve property tax (ENFIA) in villages under 1,500 residents by 2026 and abolish it entirely in 2027.
Support for Pensioners & Public Servants
- The government will halve the so-called ‘personal difference’ in pensions — a transitional adjustment introduced during Greece’s bailout era to cushion steep benefit cuts — by 2026 and abolish it entirely in 2027, benefiting 671,000 retirees.
- Military and diplomatic staff will receive salary increases under a new pay scale.
- Additional defense investment tax deductions may reach €150 million ($175.785.000 million).
Looking Ahead to 2030
Mitsotakis outlined four long-term reforms requiring cross-party consensus: a national high school diploma for university entry, a modernized public health system, streamlined zoning and a complete land registry, and a national energy roadmap securing affordable electricity and autonomy.
“2026 and 2027 are milestones, but our destination is 2030,” the prime minister said, framing the tax cuts and reforms as part of a broader strategy to strengthen growth, support families, and modernize the state.
The opposition’s response
In response to Prime Minister Kyriakos Mitsotakis’s address at the Thessaloniki International Fair, PASOK (Panhellenic Socialist Party) spokesperson Kostas Tsoukalas criticized the government’s new economic measures, describing them as a partial refund rather than a genuine dividend of growth.
According to PASOK’s Spokesperson, the policies return only a fraction of the heavy taxation that citizens have faced in recent years—largely due to the government’s refusal to adjust income tax brackets in line with inflation, as well as its reliance on rising consumer prices to generate higher VAT (Value Added Tax) revenues.
Tsoukalas argued that the absence of inflation adjustment has been the main driver of increased tax burdens on millions of wage earners. While the government announced lower tax rates, he said these measures only partly compensate for what he called an “inflation tax,” with single workers without children bearing the greatest cost.
Addressing the issue of soaring prices, he accused the Prime Minister of ignoring the problem of cartels and market concentration, offering instead what he described as vague assurances and an overreliance on the market’s “goodwill” to reduce costs.
He also questioned the credibility of the government’s fiscal planning. While Mitsotakis presented detailed costings for his tax package—figures that exceeded what officials had previously deemed fiscally sustainable—he provided no estimates for the other measures announced.