From 1 January 2026, Estonia will completely change the way the tax-free basic allowance for personal income tax works. The so-called “tax hump” (Estonian: maksuküür), under which the amount of the tax-free allowance depended on annual income and gradually tapered down to zero, will be abolished. Instead, a single tax-free allowance of €700 per month (€8,400 per year) will be introduced for all working tax residents.