In short: In 2026 net salary is calculated like this: the II pillar (2 %) and unemployment insurance (1.6 %) are deducted from gross pay, then the €700 tax-free allowance, and 22 % income tax is taken from the rest. The employer also pays 33 % social tax (on at least €886) and 0.8 % unemployment insurance. A €2,000 gross salary gives €1,657.84 net. Get the exact figure with our salary calculator.
A job offer usually states the gross salary, but your bank account receives the net amount, and the employer pays about a third more again. Here is exactly how net salary in Estonia in 2026 is calculated, which taxes apply and what changed this year. You can check every example in our free salary calculator.
Gross salary, net salary and employer cost
- Gross salary – the pay agreed in the employment contract, before tax.
- Net salary – what reaches the employee’s bank account.
- Employer cost (payroll cost) – gross salary plus social tax and the employer’s unemployment insurance.
Payroll taxes in Estonia in 2026
- Income tax 22 % (Income Tax Act § 4).
- Tax-free allowance €700 a month, or €8,400 a year, regardless of income (§ 23). The old “tax hump” is gone. People of pension age get €776 a month, but it is used against the pension first.
- Unemployment insurance: employee 1.6 %, employer 0.8 %.
- Funded pension (II pillar): 2 % by default, 4 % or 6 % by choice, or 0 % if payments are suspended.
- Social tax 33 %, paid by the employer, with a monthly minimum base of €886, i.e. €292.38 (Social Tax Act § 2), except for the exemptions listed in the law.
How to calculate net salary step by step
Example: gross salary €2,000, II pillar 2 %, tax-free allowance €700.
- II pillar: 2,000 × 2 % = €40.
- Unemployment insurance: 2,000 × 1.6 % = €32.
- Taxable amount: 2,000 − 40 − 32 − 700 = €1,228.
- Income tax: 1,228 × 22 % = €270.16.
- Net salary: 2,000 − 40 − 32 − 270.16 = €1,657.84.
The employer also pays €660 social tax and €16 unemployment insurance, so the total cost is €2,676.
Examples: gross, net and employer cost in 2026
With a 2 % II pillar and the €700 allowance:
| Gross | Employer cost | Net |
|---|---|---|
| €886 | €1185.47 | €820.20 |
| €1500 | €2,007.00 | €1,281.88 |
| €2000 | €2,676.00 | €1,657.84 |
| €3,000 | €4,014.00 | €2,409.76 |
€886 is the minimum wage at the start of 2026. From 1 April 2026 the minimum wage rises to €946, but the social tax minimum base stays at €886 for the whole year.
How to calculate gross salary from net
When a candidate says “I want €1,500 in hand”, the reverse calculation is harder because the taxes depend on each other. Under the 2026 rules, €1,500 net equals €1,790.08 gross, and the employer cost is €2,395.13. Our salary calculator works in all three directions: from gross, from net and from employer cost.
Special cases the calculator handles
- Several jobs: the tax-free allowance can be used with one employer only. Set it to €0 for the second job.
- Pension age: the employee’s unemployment insurance is not withheld, but the employer’s 0.8 % remains. The employer can only apply the part of the allowance the pension leaves unused.
- Social tax minimum does not apply, for example, to state pension recipients, a parent of a child under 3 or students. The full list is in § 2(4) of the Social Tax Act.
The rules are set by the Riigikogu (Estonian parliament), and the Tax and Customs Board (emta.ee) issues guidance. The calculator is an aid; always check official figures with EMTA.
Frequently asked questions
What is €2,000 gross in net salary in Estonia in 2026?
With a 2 % II pillar and the €700 allowance the net salary is €1,657.84. The employer cost is €2,676.
Is the tax-free allowance €700 for everyone in 2026?
Yes, €700 a month regardless of income. People of pension age get €776, but it is applied to the pension first.
How much is social tax in Estonia in 2026?
33 % of gross salary, but on at least €886 a month, i.e. €292.38, unless the employee falls under an exemption in the law.
How do I calculate gross salary from net?
Choose “net” in the salary calculator. For example, €1,500 net in 2026 means €1,790.08 gross.
Our salary calculator is one of our free tools. If your company needs payroll, time tracking or HR software, we build custom software.
