Starting January 1, 2026, Azerbaijan will phase out existing personal income tax exemptions, introducing new tax rates that will directly affect employee salaries.
According to KhazarTV, the draft amendments set a 3% income tax for monthly earnings up to 2,500 manats.
Salaries between 2,500 and 8,000 manats will be taxed at 10%, while income exceeding 8,000 manats will face a 14% rate.
Member of Parliament Vugar Bayramov noted that the rates will gradually increase in the coming years – to 5% in 2027 and 7% in 2028 for lower-income brackets.
Bayramov explained that whether employees will feel a drop in their take-home pay depends largely on the policies of individual companies.
“The decision to compensate for withheld taxes will rest with employers,” he said.
For example, if a worker earns 1,000 manats per month, a company could raise the gross salary to 1,050 manats to offset the 3% tax and maintain the employee’s current net income level.
The Ministry of Labor and Social Protection earlier confirmed that the new rules are part of a broader tax reform aimed at harmonizing labor and fiscal policies, while encouraging transparency in salary reporting.
