The tax exemption period for income tax in Azerbaijan will not be extended.

Starting from next year, individuals employed in the private sector will be subject to income tax.

This provision is reflected in the draft law “On the State Budget of the Republic of Azerbaijan for 2026.”

According to the draft, for employees working for taxpayers not engaged in oil and gas activities and belonging to the non-state sector, monthly income tax from salaried work will be withheld at the following rates:

• From January 1, 2026 to January 1, 2027:

  • 3% on monthly income up to 2,500 AZN

  • 75 AZN + 10% of the amount exceeding 2,500 AZN for income between 2,500 AZN and 8,000 AZN

  • 625 AZN + 14% of the amount exceeding 8,000 AZN for income over this threshold

• From January 1, 2027 to January 1, 2028:

  • 5% on monthly income up to 2,500 AZN

  • 125 AZN + 10% of the amount exceeding 2,500 AZN for income between 2,500 AZN and 8,000 AZN

  • 675 AZN + 14% of the amount exceeding 8,000 AZN for higher incomes

If a 3% income tax is added and the social insurance contributions remain unchanged, the total deductions would be as follows:

Example (Monthly Salary: 1,000 AZN):

• Income tax: 30 AZN

• State Social Protection Fund (SSPF) contribution: 86 AZN

• Unemployment insurance: 5 AZN

• Mandatory health insurance: 20 AZN
  Net salary: 859 AZN

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