September the 23rd, 2024 – Croatian wages appear set to go up once again as of the very beginning of next year, but who is set to get the highest rise?
As Poslovni Dnevnik writes, as part of the new round of tax reforms, the government is planning further hikes to Croatian wages as of 2025’s maiden month. According to so far unofficial information, there are three changes in the works related to personal deduction and tax rates. People who already take home above average salaries should feel the greatest benefits of all.
The first measure announced by Finance Minister Marko Primorac back at the beginning of July is the increase of the personal deduction from 560 to 600 euros. That refers to the non-taxable part of a person’s monthly income, for which the plan is currently an increase of 40 euros.
Another change, which yet again primarily benefits those already taking home high salaries, is the raising of the threshold for taxation at a higher rate of income tax. Incomes above 4,200 euros per month are now taxed at a higher rate (from 25 to 35.4 percent), and this threshold is set to be increased to 5,000 euros.
With this solution, the ruling authorities are meeting the demands of employers that the salaries of highly educated experts be made tax-free.
Residents of cities with higher tax rates can expect additional relief when it comes to Croatian wages. According to once again currently unofficial information, the government has plans to continue to lower the maximum income tax rates introduced by certain cities.
By far the highest tax rates lie in the City of Zagreb, where the lower rate is 23.6 percent, and the higher rate is 35.4 percent. Primorac is thinking about equating the rates for all local government units so that the lower rate can amount to a maximum of 22 percent, and the higher rate to 33 percent. Otherwise, in most cities and municipalities, the lower rate is 20 percent, and the higher rate is 30 percent.
If this idea takes off, apart from Zagreb, tax rates will have to be lowered in Rijeka, Sisak, Gospić, Ludbreg, Vrbovsko, Supetar, Vodnjan and a few other smaller municipalities.
The aforementioned tax changes will bring slightly higher Croatian wages to all employees, and those with significantly above-average salaries can expect the greatest benefits, as stated above.
