The Council of Ministers today approved the draft law of the Ministry of National Economy and Finance titled “Tax Reform for Demography and the Middle Class – Support Measures for Society and the Economy.”

The bill, which incorporates measures announced by the Prime Minister at the Thessaloniki International Fair, introduces sweeping tax cuts and support programs aimed at families, the middle class, young people, and regional communities, while also providing incentives for strategic investment.

Key Measures

• Income Tax Cuts: Lower rates for incomes up to €40,000, with extra reductions for families with children. Young people up to 25 will pay no tax on earnings up to €20,000. About 4 million taxpayers are expected to benefit.
• Support for Small Communities: Gradual abolition of ENFIA (property tax) for main residences in settlements up to 1,500 inhabitants (1,700 in Evros), beginning with a 50% cut in 2026.
• Housing & Property Relief:
  • New 25% rate for rental income between €12,000–€24,000.
  • VAT suspension on new construction extended to 2026.
  • Tax exemptions for long-term leases of vacant homes.
• Regional Measures: 30% VAT reduction from January 2026 on Aegean islands and Samothrace with populations under 20,000.
• Investment Incentives: 100% super-deduction for private investment in defense, automotive, and aerospace sectors, along with fast-track licensing.
• Other Tax Changes:
  • Abolition of the 10% pay-TV fee from 2026.
  • Reduced presumptions for housing and vehicles.
  • Continued tax incentives for electronic payments.
• Wage Adjustments:
  • Pay raises for police, fire brigade, and coast guard from October 2025.
  • Higher allowances for Foreign Ministry staff and recognition of five-year university diplomas for salary progression.
  • New tax-free allowances for academic and research staff.

Broader Vision

The reforms aim to strengthen the middle class, make life more affordable for families and young people, and channel investment into critical sectors. The government also confirmed that related initiatives announced at the Thessaloniki International Fair — such as the new armed forces pay scale and the creation of a Drug Innovation Fund — will be legislated in upcoming bills.