In January, Estonia experienced a decrease in tax revenue, with the budget deficit reaching 78 million euros, equivalent to 0.2 percent of the estimated annual GDP. This decline in government revenue was primarily due to lower corporate income tax collections compared to the high figures from the previous year. According to Kadri Klaos, head of the State Finance Department, the drop in tax revenue from distributed profits in the private sector was significant, highlighting the contrasts from the previous year's record collections fueled by an increase in tax rates.

The total tax collections amounted to 1.3 billion euros, indicating a 7.7 percent decrease from January 2025. Furthermore, social security funds began the year with a 28 million euro deficit, 18 million of which was attributed to the Health Insurance Fund. The continuing financial struggles are seen as a result of a worsening situation after the termination of additional support decided during the COVID crisis, which has increased pressure on the current budget management and future planning for Estonia's economy.

This decline in tax revenues and the resultant budget deficit underscore the challenges faced by Estonia's fiscal policy in the wake of changing economic conditions. With the sharp decrease in revenues, the government will need to reassess its budget strategies and consider potential adjustments to public spending and social security funding, which may impact various sectors moving forward.