Baku: Due to the expiration of the income tax exemption for individuals working in the non-oil and gas and non-state sectors, which has been in effect in Azerbaijan since 2019, on January 1, 2026, taxes will be levied on the monthly income of individuals from hired work under a new procedure, APA reports. This is reflected in the amendment to the Tax Code approved by President Ilham Aliyev.

According to Azeri-Press News Agency, the new tax system will affect employees in the non-oil private sector with different rates based on income brackets. Those earning up to 2,500 manats per month will see a tax rate of 3% in 2026, increasing to 5% in 2027, and reaching 7% from 2028 onwards.

For individuals with a monthly income ranging from 2,500 to 8,000 manats, the tax will be calculated as 75 manats plus 10% of the income portion exceeding 2,500 manats in 2026. This calculation changes to 125 manats plus 10% in 2027, and 175 manats plus 10% from 2028.

Employees with a monthly income exceeding 8,000 manats will be subject to a tax of 625 manats plus 14% of the income portion over 8,000 manats in 2026. The rate increases to 675 manats plus 14% in 2027, and 725 manats plus 14% from 2028.

It should be noted that the tax on the monthly income of individuals who do not have activities in the oil and gas sector and work for taxpayers belonging to the non-state sector was withheld for 7 years from January 1, 2019, at a rate of 0 percent if the monthly income is up to 8,000 manats, and 14 percent if it is more than 8,000 manats.