Starting from next year, employees working in the private sector will be subject to income tax.
This change is reflected in the draft law “On the State Budget of the Republic of Azerbaijan for 2026.”
According to the draft, beginning in 2026, income tax will be gradually applied to the wages of employees working for taxpayers operating outside the oil and gas sector and in the non-state (private) sector.
Under the new tax rates:
2026 (January 1, 2026 – January 1, 2027)
Up to 2,500 AZN monthly income: 3%
From 2,500 to 8,000 AZN monthly income: 75 AZN + 10% of the amount exceeding 2,500 AZN
Over 8,000 AZN monthly income: 625 AZN + 14% of the amount exceeding 8,000 AZN
2027 (January 1, 2027 – January 1, 2028)
Up to 2,500 AZN monthly income: 5%
From 2,500 to 8,000 AZN monthly income: 125 AZN + 10% of the amount exceeding 2,500 AZN
Over 8,000 AZN monthly income: 675 AZN + 14% of the amount exceeding 8,000 AZN
From 2028 onward (starting January 1, 2028)
Up to 2,500 AZN monthly income: 7%
From 2,500 to 8,000 AZN monthly income: 175 AZN + 10% of the amount exceeding 2,500 AZN
Over 8,000 AZN monthly income: 725 AZN + 14% of the amount exceeding 8,000 AZN
In addition to changes in income tax, changes have also been approved in the State Social Insurance Fund and medical insurance. Thus, for the State Social Insurance Fund, 10% of the amount over 200 manat plus 6 manat, for medical insurance, 2% up to 2500 manat, and for more than 2500 manat, 50 AZN plus 0.5% of the amount over 2500 manat. Unemployment insurance remains the same.
Bonus! Salary Calculator
Taking these changes into account, our finance team has developed a calculator to find gross from net. Using this calculator, you will be able to easily calculate income tax withheld from wages in the country from January 1, 2026.
With this effective solution, you can reduce the calculation process that takes hours to seconds!
