Personal income tax in Cyprus is charged on a progressive scale, and from 2026 the first €22,000 of income is tax-free. Above that, income is taxed in bands rising from 20% to a top rate of 35%. The 2026 tax reform raised the tax-free threshold from €19,500, widened the bands and layered in a set of household allowances and new flat rates — leaving Cyprus with a personal tax system that remains light by EU standards, especially for residents who also use the non-dom regime.
This guide sets out the 2026 bands and how the tax is actually calculated, the order in which Social Insurance and GHS are deducted, the household allowances and who can claim them, the expatriate exemptions that make relocation attractive, and the new 8% rates on crypto and share-scheme income. Every figure reflects the framework in force for the 2026 tax year.
The 2026 income tax bands
Cyprus taxes the income of resident individuals on a worldwide basis, applying the following progressive bands for 2026:
| Chargeable income (€) | Rate |
|---|---|
| 0 – 22,000 | 0% |
| 22,001 – 32,000 | 20% |
| 32,001 – 42,000 | 25% |
| 42,001 – 72,000 | 30% |
| over 72,000 | 35% |
Because the bands are marginal, only the portion of income falling within a band is taxed at that band's rate. A common misconception is that crossing into a higher band re-taxes your whole income at the higher rate; it does not. Someone earning €33,000, for example, pays nothing on the first €22,000, 20% on the next €10,000 and 25% on just the final €1,000.
Some secondary websites still quote bands with breakpoints at €35,000 and €60,000. Those are incorrect for 2026 — the enacted breakpoints are €22,000, €32,000, €42,000 and €72,000. Always check figures against the current law before relying on them.
How the tax is actually calculated
For employees, income tax does not bite on gross salary. The employee's Social Insurance (8.8%) and GHS (2.65%) are deducted first, and income tax is then calculated on the reduced figure. This ordering — contributions before tax — meaningfully lowers the effective rate.
An employee earns €50,000 gross. Social Insurance of €4,400 and GHS of €1,325 are deducted, leaving €44,275 of taxable income. The tax is: €0 on the first €22,000; €2,000 on the band to €32,000 (20%); €2,500 on the band to €42,000 (25%); and €682.50 on the remaining €2,275 (30%). Total income tax is €5,182.50. Add it to contributions and the all-in deduction is still well under 25% of gross. Model any figure with our income tax calculator or net salary calculator.
New household allowances
The 2026 reform introduced a set of household allowances that reduce taxable income, granted per single person, spouse or partner and aimed at families and home-owners. The principal reliefs are:
| Allowance | Amount |
|---|---|
| Interest on a primary-residence loan, or rent for a primary residence | Up to €2,000 |
| Energy-efficiency and renewable-energy upgrades to the primary residence | Up to €1,000 (plus a further €1,000 line) |
| Life and medical insurance premiums (in addition to existing relief) | Up to €500 |
| Property insurance against natural disasters | Up to €500 (no income criteria) |
| First dependent child | €1,000 |
| Second dependent child | €1,250 |
| Third and each further dependent child | €1,500 |
Most of these reliefs (housing, energy and children) are subject to family-income ceilings: they are available to a single person up to €40,000 of income and to a family up to €100,000, with the family ceiling rising to €150,000 for families with three or four children and €200,000 for families with five or more. The property natural-disaster insurance deduction, by contrast, has no income test. Our 2026 allowances calculator shows which reliefs apply at your income level.
Exemptions for expatriates and investors
Cyprus keeps several powerful exemptions that are central to its appeal for relocating professionals and investors:
- 50% exemption — for an individual taking up their first employment in Cyprus, who was not Cyprus tax resident for 15 consecutive years beforehand, on remuneration exceeding €55,000 a year. Half of the salary is exempt, for up to 17 years.
- 20% exemption — for first Cyprus employment, capped at €8,550 a year for up to 7 years, where the 50% exemption does not apply.
- Foreign pension income — taxed either under the normal bands or, by election, at a flat 5% on the amount over €5,000.
- Gains on disposal of securities — shares, bonds, units and similar "titles" are exempt from income tax (0%).
- Lump sums — approved retirement gratuities and certain compensation payments are exempt.
These reliefs interact, and the conditions are strict — the 50% exemption, for instance, is once-per-lifetime and depends on the prior-non-residence test. Getting the analysis right at the point of relocation is far easier than unwinding a missed claim later. Our individuals and non-dom service handles exactly this.
The new 8% and 20% measures
The reform also introduced targeted flat rates that sit outside the normal bands:
- Crypto-asset gains: profits on the disposal of crypto-assets held as an investment are taxed at a flat 8% (mining is treated differently).
- Employee share schemes: qualifying benefits from approved share or stock-option schemes are taxed at a flat 8%, subject to conditions.
- Ex-gratia and termination payments: the first €200,000 is effectively tax-free, with the excess taxed at a flat 20%.
We explore the full sweep of the reform — including the corporate and SDC changes — in our overview of the 2026 Cyprus tax reform.
Filing and deadlines
Filing a personal income tax return is generally mandatory from the year you reach age 25 (income-based exemptions otherwise apply below the filing threshold). Employees and pensioners file their return for a year by 31 July of the following year, electronically through the Tax For All portal. The self-employed have different, later deadlines, covered in our guide to going self-employed in Cyprus and our 2026 tax calendar.
For most employees the income tax due is already withheld through PAYE across the year, so the annual return is a confirmation rather than a large balancing payment. Keep the documentation for any allowance you claim — loan interest certificates, rent agreements, insurance premiums and energy-upgrade invoices — because the new allowances are documentation-driven.
Paying the right amount — and not a euro more
Cyprus personal tax rewards people who plan: the €22,000 tax-free band, the household allowances, the expat exemptions and the non-dom SDC exemption can combine to produce a strikingly low effective rate — but only if each relief is claimed correctly and the conditions are met. Equally, the new 8% and 20% measures need to be applied to the right income.
If you are relocating to Cyprus, drawing a salary from your own company, or simply want to be sure you are claiming everything you are entitled to, get in touch. Our tax compliance service prepares and files your return accurately and on time, and flags the planning opportunities before the year closes.