Baku: Income tax deductions will be enforced on employees in Azerbaijan’s non-oil-gas and non-state sectors following the expiration of a tax exemption on January 1, 2026. This development stems from amendments proposed to the Tax Code, which were discussed during a meeting of the Parliamentary Committee on Economic Policy, Industry, and Entrepreneurship.

According to Azeri-Press News Agency, the new tax procedure will introduce a graduated tax rate depending on income levels, commencing in 2026. Employees with a monthly income up to 2,500 manats will be subject to a 3% tax, increasing to 5% in 2027, and 7% from 2028 onward.

For those earning between 2,500 and 8,000 manats monthly, the tax will be 75 manats plus 10% of the income portion exceeding 2,500 manats in 2026. This will rise to 125 manats plus 10% in 2027, and further to 175 manats plus 10% from 2028.

Individuals with a monthly income exceeding 8,000 manats will face a tax of 625 manats plus 14% on the portion above 8,000 manats in 2026. The tax will increase to 675 manats plus 14% in 2027, and 725 manats plus 14% from 2028 onward.

The previous tax structure, effective since January 1, 2019, allowed for a 0% tax rate on monthly incomes up to 8,000 manats for seven years, while incomes exceeding 8,000 manats were taxed at 14%. This exemption will conclude at the end of 2025, necessitating the introduction of the new tax measures.