A higher tax-free threshold, wider bands, and a new corporate rate
In short
- From the 2026 tax year the first 22,000 euros of taxable income are free of income tax, up from 19,500.
- The top 35 per cent band now starts at 72,000 euros instead of 60,000.
- Companies pay 15 per cent from 2026, up from 12.5. The rates sit in the Second Schedule of the Income Tax Law.
Cyprus taxes the income of individuals on a progressive scale set out in the Second Schedule of the Income Tax Law, Law 118(I)/2002. The reform Law 244(I)/2025, in force from 1 January 2026, rewrote that Schedule: it added a new scale for tax years from 2026 onwards and moved the corporate rate. The tax year is the calendar year, and the scale applies to taxable income, that is, income after the deductions and exemptions the law allows.
This page states the rates as enacted, with the outgoing scale kept alongside, because returns and assessments for earlier years continue to use it.
The first step
Rates are the easy part; residency and domicile decide what they apply to. Check where you stand with the residency and non-dom checker, or send us your facts and a partner replies within one business day.
Discuss your tax positionFrom the 2026 tax year
The scale for individuals, 2026 onwards
Up to 22,000 euros
0%
No income tax on the first 22,000 euros of taxable income.
22,001 to 32,000 euros
20%
Twenty per cent on each euro within the band.
32,001 to 42,000 euros
25%
Twenty-five per cent on each euro within the band.
42,001 to 72,000 euros
30%
Thirty per cent on each euro within the band.
Over 72,000 euros
35%
Thirty-five per cent on every euro above 72,000.
The scale is marginal: each rate applies only to the slice of income inside its band, so crossing a threshold never reduces what you keep.
Up to the 2025 tax year
The outgoing scale, still governing earlier years
Up to 19,500 euros
0%
19,501 to 28,000 euros
20%
28,001 to 36,300 euros
25%
36,301 to 60,000 euros
30%
Over 60,000 euros
35%
This scale applied from the 2008 tax year through 2025. Assessments, objections and returns for those years are worked on these bands, whatever the calendar says when they are filed.
Companies, and the rest of the reform
Fifteen per cent for companies, and where the other changes live
The same amending law replaced the 12.5 per cent corporate rate with 15 per cent for tax years from 2026. For companies in the IP box, the effective ceiling on qualifying profits moved with it, from 2.5 to 3 per cent; the mechanics are in our IP box guide.
The December 2025 reform package also rebuilt the special contribution for defence: dividends for resident domiciled individuals at 5 per cent with a transitional rule, the deemed distribution regime wound down, and rents taken out of the contribution altogether. Those changes, and who escapes them entirely, are set out in our non-dom guide. Whether the scales on this page apply to your worldwide income at all is the residency question, covered in the 183-day and 60-day rules.
Common questions
Do these bands apply to me at all?
Only if you are tax resident here. Section 2 of the Income Tax Law, Law 118(I)/2002, defines a resident in the Republic, for an individual, by reference to days spent in the Republic, and sets out how the days are counted: the day of departure counts as a day outside, the day of arrival as a day in, arrival and departure on the same day as one day in, and departure and return on the same day as one day out. Those four rules decide more borderline cases than the headline day count does.
And for a company?
Section 2 gives two limbs. A company is resident in the Republic where its control and management are exercised in the Republic, or where it is incorporated in the Republic under the Companies Law, unless a double taxation treaty provides otherwise. A proviso adds that a company which has transferred its registered office or its seat to the Republic is treated as having been incorporated here.
When do the new bands start to apply?
From the 2026 tax year, which is the 2026 calendar year. Law 244(I)/2025 entered into force on 1 January 2026 and its scale is expressed to apply from the tax year 2026 onwards. Income of 2025 and earlier years remains under the previous scale.
Is the 35 per cent rate charged on my whole income once I pass 72,000 euros?
No. The scale is marginal: 35 per cent applies only to the part of taxable income above 72,000 euros. The slices below it keep their own rates, from the tax-free 22,000 upwards.
Do the bands apply to gross income?
No, to taxable income: what remains after the deductions and exemptions the Income Tax Law allows. Two people with the same gross salary can land in different bands once their deductions differ.
What about dividends and interest?
For individuals those are generally the territory of the special contribution for defence rather than the income tax scale, and the defence contribution turns on domicile as well as residency. From 2026 the dividend rate for resident domiciled individuals is 5 per cent, with a transitional rule for older profits; a resident non-dom is outside the contribution.
Did the corporate rate change for existing companies too?
Yes. The 15 per cent rate is not limited to new companies; it applies to the taxable income of companies for tax years from 2026 onwards, whoever they are and whenever they were incorporated.
Related reading
Every figure on this page was read in the primary texts, the Second Schedule of the Income Tax Law (118(I)/2002) and the reform Law 244(I)/2025 as published in the Official Gazette, and is recorded in the register of sources.