Azerbaijan may introduce new personal income tax rates beginning in 2026, as the seven-year tax exemption for employees in the non-oil and private sectors, in effect since 2019, is not expected to be extended.
According to Report, the draft amendments to the Tax Code do not include any provisions to prolong the existing tax benefits.
Under the proposed plan, individuals earning up to 2,500 manats per month would pay an income tax of 3% in 2026, rising to 5% in 2027 and 7% in 2028.
For those with monthly incomes between 2,500 and 8,000 manats, the tax will be calculated as follows:
2026: 75 manats + 10% of income exceeding 2,500 manats
2027: 125 manats + 10% of income exceeding 2,500 manats
2028: 175 manats + 10% of income exceeding 2,500 manats
For individuals earning over 8,000 manats, the proposed rates are:
2026: 625 manats + 14% of income exceeding 8,000 manats
2027: 675 manats + 14% of income exceeding 8,000 manats
2028: 725 manats + 14% of income exceeding 8,000 manats
The amendments are part of the 2026 state budget package, which will be submitted to the Milli Majlis (parliament) for review. The new rates will come into effect upon approval and signature by President Ilham Aliyev.
The income-tax exemption, initially introduced to formalize salaries in the private sector, was designed for seven years and expires at the end of 2025.
