How will the personal income tax rates change from 2025?

Starting from 2025, new rules regarding personal income tax rates will come into effect in Slovakia. These changes are part of a government consolidation package aimed at improving the state of public finances and implementing a fairer tax system. The new tax rates reflect the principle of progressive taxation — higher incomes are taxed at higher rates.

Main Rules for Personal Income Taxation

Personal income tax depends on the source of income. The main categories include:

Income from employment: for example, wages from employment contracts or agreements.
Income from rental properties: for example, rent from an apartment or office.
Income from artistic activities: royalties from licensing agreements for artwork or performances.
Other income: income from the sale of real estate or other one-time earnings.

These incomes are combined into partial tax bases, from which the overall tax base is then calculated.

Personal Income Tax Rates in 2025

Starting from 2025, the following tax rates will apply:

19%: applies to the portion of the tax base not exceeding 48,441.43 euros.
25%: applies to the portion of the tax base exceeding 48,441.43 euros.

These limits are based on the current minimum living standard, which for the period from July 1, 2024, to June 30, 2025, is set at 273.99 euros. Therefore, the threshold for applying the higher tax rate is set at 176.8 times the minimum living standard.

Changes Starting from 2024

In 2024, similar tax rates were in effect, but the threshold between the lower and higher rates was slightly lower due to the smaller minimum living standard. The increase in the tax base threshold to 48,441.43 euros reflects the growth in the minimum living standard and slightly delays the application of the higher tax rate.

Income Affecting the Tax Base

The tax base will include income from various sources that are not exempt from taxation:

Income from employment: reduced by non-taxable portions of the tax base.
Income from rental properties: included without additional exemptions, though expenses related to the rental can be claimed.
Income from works of art: if they were not taxed at the source, they are included in the tax base.
Other income: for example, income from the sale of real estate, if not exempt from taxation.

Progressive Taxation: How Does It Work?

Progressive taxation ensures that higher incomes are taxed at a higher rate. This means that the 19% rate will apply to the first portion of the tax base (up to 48,441.43 euros), while the higher 25% rate will apply to the portion exceeding this threshold.

Tax Base for Business Activity and Self-Employment

According to Section 4, Paragraph 1(b) of the Corporate Income Tax Act, the tax base is determined as a partial tax base from:

Income from business activity (Section 6, Paragraph 1): for example, income from trade.
Income from other self-employment (Section 6, Paragraph 2): for example, income from legal practice, tax consultancy, or other self-employed professions.

This tax base can be reduced by:

Non-taxable portions of the tax base or parts of it.
Tax losses carried forward from previous tax periods

New Threshold for Applying the Reduced Tax Rate

A key change starting from 2025 is the increase in the taxable income threshold for applying the reduced tax rate, from 60,000 euros to 100,000 euros per tax period. This measure is aimed at reducing the tax burden for small entrepreneurs and self-employed individuals and will allow them to benefit from a more favorable tax rate for higher incomes.

Tax Rates Starting from 2025

Income does not exceed 100,000 euros

If the taxpayer's taxable income does not exceed 100,000 euros, the entire tax base is taxed at a single rate:

15%: applies to the entire tax base, regardless of its size.

Income Exceeds 100,000 euros

If the taxable income exceeds the 100,000 euro threshold, the taxpayer can no longer apply the reduced 15% rate. Instead, progressive rates are applied depending on the size of the tax base:

19%: on the portion of the tax base that does not exceed 48,441.43 euros.
25%: on the portion of the tax base that exceeds 48,441.43 euros.

Important Changes for 2025

Increase of the 15% rate threshold: The increase in the threshold from 60,000 euros to 100,000 euros is a significant relief for small businesses and self-employed individuals.
Retention of the progressive system: For incomes exceeding 100,000 euros, a higher tax rate is applied depending on the size of the tax base, ensuring fair taxation.
Incentives for small businesses: These measures support businesses with low incomes and reduce their tax burden.

Personal Income Tax Rates on Income from Capital Assets Starting from 2025

Starting from 2025, the taxation of income from capital assets in Slovakia will remain unchanged. These incomes are subject to taxation at a special rate and, in most cases, are taxed at the time of payment, ensuring effective compliance with the tax obligation.

What is Income from Capital Assets?

According to Section 7 of the Corporate Income Tax Act, income from capital assets includes, for example:

Interest and other income from securities: such as income from stocks or bonds.
Interest, winnings, and other income from deposits: income from interest on savings accounts or term deposits.
Interest and other income from loans and credits provided: income of an individual as a lender from interest earned on loans or credits provided.

Corporate Income Tax Rate on Capital Assets in 2025

Income from capital assets forms a special tax base and is taxed at a single rate:

19%: applies regardless of whether the income comes from sources within the Slovak Republic or abroad.

Taxation of Income from Capital Assets

In most cases, income from capital assets is subject to the withholding tax system, as regulated by Section 43 of the Corporate Income Tax Act. This means that the income is taxed at the time of its payment or crediting to the taxpayer, and the recipient of the income pays the tax. For example:

Interest on a savings account: the bank withholds tax on the accrued interest and remits it directly to the tax authorities.

Withholding tax simplifies the tax calculation, as the taxpayer does not need to include this income in their tax return if it has already been taxed under this system.

Important Rules for Taxation of Capital Income

Single tax rate: a fixed rate of 19% applies, regardless of the amount of income.
Source of income: income from both domestic and foreign sources is subject to tax.
Withholding tax: in most cases, income is already taxed at the time of its crediting or payment.
No reporting in the tax return: if the income was taxed at source, the taxpayer is no longer required to report it in the tax return, as it is considered settled tax.

Personal Income Tax Rates on Share of Profit, Liquidation Balance, and Equalization Share Starting from 2025

Starting from 2025, the personal income tax rate on share of profit, liquidation balance, and equalization share will be reduced in Slovakia. This step, as part of the consolidation package, brings the tax rate back to 7%, which was in effect from 2017 to 2023. The new rate will apply to profits declared for tax periods starting from January 1, 2025.

Key Taxation Rules

Personal income from share of profit, liquidation balance, and compensation shares is taxed as follows:

Share of profit: Income of an individual from the distribution of profits by commercial companies or cooperatives.
Share of liquidation balance: Income of an individual from the liquidation of a company or cooperative.
Compensation shares: Income paid to partners after the termination of their participation in a company.

These incomes are subject to withholding tax, and the tax is paid by the entity distributing the income (e.g., the company or cooperative). Therefore, the taxpayer no longer needs to include them in their tax return if the income comes from sources within the Slovak Republic.

Tax Rates Starting from 2025

7% Rate
From 2025, the 7% rate will be reintroduced on:

Shares of profit declared for the years 2017–2023 and again from January 1, 2025.
Shares in the liquidation balance if the company was liquidated between 2017 and 2023 or from January 1, 2025.
Compensation shares defined based on financial statements for the reporting periods from 2017 to 2023 and from January 1, 2025.

10% Rate
This rate applies to profit shares reported for the tax period from January 1, 2024, to December 31, 2024, as well as to:

Shares in the liquidation balance if the company was liquidated in 2024.
Compensation shares defined based on financial statements for the period from January 1, 2024, to December 31, 2024.

35% Rate

This rate continues to apply to:

Profit shares received from foreign sources from taxpayers in non-cooperative countries, such as Panama.

Practical Consequences of the Tax Rate Changes

Reduction of the Rate to 7%: The introduction of a lower rate will once again support personal income from capital gains in the Slovak Republic and reduce the tax burden.
2024 as an Exception: The higher 10% rate will only apply to portions of profit declared for the 2024 tax period.
Stricter Rules for Non-Cooperative States: The 35% rate continues to limit the use of tax havens to reduce the tax burden.

Unified Personal Income Tax Rate for Self-Employment from 2025

In 2025, Slovakia will continue to apply a special tax rate of 5% for certain income from dependent activities, which applies to constitutional officials. This rate is higher than the standard personal income tax rates and applies to the income of specific individuals in accordance with the Constitution Officials' Salary Act.

Who is Subject to the Special 5% Tax Rate?

This special tax rate applies to:

The President of the Slovak Republic,
Members of the National Council of the Slovak Republic,
Members of the Government,
And other constitutional officials whose salaries are regulated by the Constitution Officials' Salary Act.

How the Special 5% Tax Rate is Applied

The special 5% tax rate is applied in addition to the standard income tax for individuals who are subject to:

A 19% tax rate on income up to 48,441.43 euros.
A 25% tax rate on income exceeding that amount.

Example: If a member of the National Council of the Slovak Republic receives income from dependent activity amounting to 60,000 euros, the income is taxed as follows:

The standard 19% tax rate applies to the portion of the tax base up to 48,441.43 euros.
The standard 25% tax rate applies to the portion of the tax base exceeding 48,441.43 euros.
Additionally, the special 5% rate applies to the total income.

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