Cyprus’s tax reform came into force this month, cutting tax bills and boosting disposable income for citizens, families and businesses across the island.
The overhaul raises tax-free income to €22,000 for everyone regardless of family status and introduces lower, more progressive rates that ease the burden on the middle class, according to the government.
The new system applies rates of 20% on income from €22,001 to €32,000, 25% from €32,001 to €42,000, 30% from €42,001 to €72,000, and 35% above €72,000.
The government says the reform creates a fairer, simpler and more competitive system adapted to the real needs of society and the economy, focusing on people, the middle class, families and healthy entrepreneurship.
Official examples show how different households benefit:
A two-income household with two children or students up to 24, a recent €200,000 housing loan and solar panels sees its combined tax bill drop from €4,400 to €1,000—a saving of €3,400.
Each spouse earns €30,000 in taxable income and the household claims €11,000 in total deductions including allowances for dependent children, mortgage interest and solar installation.
A single parent with two children, paying €7,000 annual rent and owning an electric vehicle, saves €2,350. With €35,000 in taxable income and €7,500 in deductions, the tax bill falls from €3,450 to €1,100. The reform treats single-parent families in the most favourable scenario, the government said.
A single person paying €6,000 rent and owning an electric vehicle saves €1,100. With €28,000 in taxable income and €3,000 in deductions, tax drops from €1,700 to €600.
Large families benefit most. A household with five children or students up to 24, a €250,000 housing loan and recent energy upgrades saves €5,993. With one spouse earning €70,000 and another €55,000, and claiming €18,400 in deductions, the combined tax bill falls from €23,770 to €17,777.
The reform passed after two decades of debate. The government says it aims to return benefits directly to citizens, strengthen social cohesion and create stable foundations for sustainable and competitive growth.
A digital calculator at https://www.gov.cy/taxreform/ lets citizens calculate their personal savings from the reform.
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