The Finance Committee started proceedings on the next year’s state budget Bill

According to Chair of the Finance Committee Annely Akkermann, the Committee plans to discuss the state budget by areas of government at several sittings next week.

“During the discussion, we want to get information from the ministers about the goals and costs of the programmes planned in the performance-based budget, what the desired outcome is, and how it will be measured,” Akkermann said. “The budget needs to be justified and transparent.”

The total volume of the state budget for 2026 is 20.9 billion euro. The revenues of the budget will amount to 18.6 billion and the expenditures will amount to 19.5 billion euro. The investments amount to 1.3 billion euro. The planned government sector deficit is 4.5 per cent of GDP, which remains within the limits of the exemption granted by the EU for rapid growth in defence spending. Due to the significant increase in the budget deficit, next year’s debt burden will grow by 1.7 billion euro, to 25.9% of GDP.

Compared to the budget of 2025, budget revenues will grow by 843 million euro or by 4.7 per cent. The total volume of expenditure will increase by 1.15 billion euro, or 6.3%, over the year. The total volume of investments will increase by 32%, or 305 million euro, over the year.

The government says the increase in defence spending to five per cent of GDP is the largest increase in expenditure, which will require an additional 844.5 million euro next year.

The government plans to invest 276.8 million euro in road infrastructure, including 65 million euro from motor vehicle tax, and 684.2 million euro in railways, among other things to ensure the completion of Rail Baltic by 2030.

According to the Bill, state revenues will decrease by 780 million euro as a result of the introduction of a uniform 700 euro income tax exemption and the cancellation of the planned two-percentage-point increase in income tax. The tax burden in Estonia will fall from 36.6% to 35.2%.

Together with the tax changes, the net income of those who earn the average salary of teachers will increase by 319 euro per month, or 3828 euro per year. However, earlier cuts in operating expenses will also be applied in the same areas – the total cuts in the Ministry of Education, the Ministry of the Interior, and the Ministry of Culture will amount to 94 million euro in 2026, to which the Ministry of Education and Research will add another 18 million euro through a budget revision.

28.9 million euro will be allocated for salary increases in the area of governance of the Ministry of the Interior in 2026, which will enable front line rescuers, police officers, rescue coordinators, and lecturers at the Estonian Academy of Security Sciences to receive a salary increase of nearly 10 per cent The average pension is expected to increase by 5.4 per cent, 210 million euro have been allocated in the budget for this purpose.

The motor vehicle tax reduction for families with children and the taxation of 8-9-seater M-category vehicles similarly to the N-category vehicles, which will come into effect in 2026, will reduce the amount of motor vehicle tax to be collected by 14 million euro. To achieve budget neutrality, 48 million euro from motor vehicle tax will be allocated to the consolidated project for national roads.

The subsistence benefit limit will be raised to 220 euro (an increase of 20 euro), and the subsistence level for each minor child in a family will be raised to 264 euro, for which an additional 4 euro million will be allocated from the budget.

The Finance Committee of the Riigikogu decided to send the State Budget for 2026 Bill (737 SE), initiated by the Government, to the first reading at the plenary sitting of the Riigikogu on 7 October.  

Riigikogu Press Service
Gunnar Paal
+372 631 6351, +372 5190 2837
gunnar.paal@riigikogu.ee
Questions: press@riigikogu.ee

Link uudisele: The Finance Committee started proceedings on the next year’s state budget Bill

Source: Parliament of Estonia