Cyprus is planning important tax changes. These changes will start in 2026. The main goal is to help middle-class families. People will not pay tax on the first €22,000 they earn. This will help many people with their money. However, a new family tax system will be difficult. People may find it hard to understand for their 2027 taxes.
The Cyprus Tax Department is making these changes. They want the tax system to match today's society. A new definition of "family" is important. It now includes civil unions and couples with children. Single parents and divorced parents with shared children are also included. This new system needs partners to agree to share their tax information.
Besides the higher tax-free amount, there will be new deductions. Families will get more money for children. The first child gets €1,000. The second child gets €1,250. Other children get €1,500 each. Homeowners can get €2,000 back for mortgage interest. Renters can also get €2,000 back for their rent. There is a €1,000 deduction for green energy. This is for things like solar panels or electric cars.
Employers must help with the new system. They will send employee income and deduction details to the tax office. This will start in January 2026. The Tax Department is also building a website. It will have information and a tax calculator. This will help people understand the new rules. The new family tax system may be complex. But the department is working hard to make it easy.