VMI Updates PIT Commentary on Expense Deduction Limits for 2026

The State Tax Inspectorate (VMI) has published an updated commentary on Paragraph 3, Article 21 of the Law on Personal Income Tax (PIT). Issued via letter No. (18.37-31-1 Mr) R-2208 on August 12, 2026, the update aligns the commentary with PIT Law amendments No. XV-343 and No. XV-680. These amendments revise the references to applicable tax rates specified in Paragraphs 1, 2, 6, 8, and 9 of Article 6.

The updated explanation details the procedure for deducting expenses such as life insurance premiums, pension fund contributions, and higher education or vocational training costs. The core principle dictates that the total amount of these deductible expenses cannot exceed 25% of taxable income. This taxable base is calculated by taking total income and subtracting the amounts listed in Items 1–5, Paragraph 1, Article 16 of the PIT Law. These deductions include non-taxable income, income from business certificates, allowable deductions from individual activity, asset acquisition costs, and the annual tax-exempt income amount (NPD).

Additionally, a strict cap applies to specific expenses. The total combined amount of life insurance premiums and supplementary pension accumulation contributions—as outlined in Items 1, 2, and 2(1), Paragraph 1, Article 21—cannot exceed a threshold of 1,500 EUR per tax year.

For businesses contributing to pension funds or life insurance on behalf of their employees, these caps apply only to income that is not exclusively non-taxable or taxed via a business certificate. These updated provisions take effect when calculating and declaring income for the 2026 tax year and subsequent periods. The technical updates for the GPM311 annual declaration forms covering the 2026 tax period will be published closer to the declaration phase in early 2027.