As the deadline for income declarations approaches on March 1st in Latvia, the State Revenue Service (VID) has indicated that many individuals may not experience overpayments of income tax (IIN) this year. This is largely attributed to the cancellation of the differentiated or forecasted tax-free minimum last year, which has now been replaced with a singular, fixed tax-free minimum of 510 euros per month, regardless of individual income levels. This shift may lead to adjustments that impact overpayment scenarios for many residents.

In 2025, changes in the calculation of income tax can allow for more precise monthly deductions directly from salaries, which could mean fewer discrepancies at year-end leading to overpayments. The VID explains that the tax differences that previously existed, potentially causing overpayments, may not manifest this year due to this newfound accuracy in tax deductions. However, it is essential for residents to understand that submitting their annual tax declaration remains a requirement.

Residents who have paid IIN and are seeking to reclaim part of it must file a tax declaration while attaching receipts for any justified expenses. This year’s changes signify an important shift in Latvia’s tax policy, reflecting a move to simplify tax calculations and ensure fairness across different income brackets. Such changes could have lasting implications for how residents manage their income tax obligations moving forward.