Next year, the revenue of the consolidated state budget is planned to be EUR 15.1 billion, whereas expenditure is in the amount of EUR 17.1 billion, according to the draft law “On the State Budget for 2025 and the budget framework for 2025, 2026, and 2027” approved by the Saeima Budget and Finance Committee on Wednesday, the 27th of November.
The draft budget also includes 31 budget-related draft laws.
Compared to the 2024 budget, next year the planned state budget revenue is estimated to be EUR 583.2 million higher, while expenditure – EUR 876.5 million higher when compared to this year’s budget law. The budget deficit for next year is planned at 2.9% of the gross domestic product, according to the Saeima Press-Service.
In total, additional funding of EUR 392.4 million is planned for priority measures next year. Taking into account the need to strengthen national security, EUR 284.3 million will be allocated next year for priority activities in the internal and external security sectors. The unpredictability of the situation in other parts of the world will continue to affect Latvia as well, so it is important to invest in the resilience of state institutions and society so that we are ready and able to overcome any crises and threats both today and in the future, as emphasized in the annotation to the draft budget.
Next year, additional funding for internal and external security of the country is planned to be directed to the areas of internal affairs and defence, as well as towards strengthening security institutions and cybersecurity.
Funding is also outlined as support for Ukrainian civilians.
A significant part of the additional funding is planned to be directed to a number of internal security measures – social protection of residents. From next year onward, it is planned to index a larger part of the old-age pension. An increase in various benefits is also planned, including an increase in the parental benefit for working parents from the previous 50% to 75%. Next year, the minimum wage will increase from EUR 700 to EUR 740 per month.
Additional funding is planned next year for state compensated medicines, primary healthcare, laboratory tests, improvement of oncology services. Additional money is also intended to pay for higher salaries of those working in the field of interior affairs and other services.
Next year, it is planned to simplify the labour tax system. It is planned to introduce two rates of personal income tax and one additional rate. Gross income up to EUR 8 775 per month will receive a rate of 25.5%, while income above EUR 8 775 per month will receive a rate of 33%. In turn, an additional rate of 3% is planned for income over EUR 200 000 per year.
The existing differentiated non-taxable minimum is planned to be replaced with a single non-taxable minimum for all wages starting with next year. Next year it will be EUR 510, EUR 550 in 2026, and EUR 570 in 2027. For pensioners, it is planned to increase the non-taxable minimum from the previous EUR 500 to EUR 1 000 per month, while the recipients of royalties will still be able not to register as economic operators until the end of 2027.
From next year, it is planned to simplify the administrative procedures for employees of the micro-enterprise tax regime, including those who perform economic activities on an occasional basis, the possibility for the micro-enterprise tax regime to register for a limited period of time is provided.
For fresh fruits, berries and vegetables typical of Latvia, it is planned to establish a 12% reduced rate of value added tax in the future. In turn, in order to increase economic activity and, consequently, budget revenue, it is planned to establish solidarity contributions for credit institutions.
From next year until the end of 2028, it is planned to transfer one percentage point of the second pension plan to the first pension plan.
The draft budget also provides for measures to reduce the grey economy – promote non-cash transactions in retail trade, make it mandatory for banks to inform the State Revenue Service about suspicious transactions in personal accounts, improve the work time accounting system at construction sites, as well as the raise the liability of merchants for violations in commercial taxi services.
Next year, it is planned to increase the road toll, increase the vehicle operation tax by an average of 10%, as well as increase the vehicle operation tax for light vehicles used by businesses by an average of 10% from 2027 onward. Also next year, it is planned to increase the gambling tax, as well as increase the fees for the re-registration of licence for the organisation of gambling.
It is also planned to increase the rates of the natural resources tax on coal, coke and lignin, as well as gradually increase the excise duty on petroleum gases used as fuel, fuel and natural gas from next year onward. It is planned to abolish the tax exemption for petroleum products used in electricity production and co-generation as well.
From 2025 onward, a higher excise tax is planned for non-alcoholic beverages with a sugar content above eight grams per 100 millilitres. In turn, from 2027, it is planned to increase the rates of excise duty on alcoholic beverages, including beer, and tobacco products.
The final reading of the state budget plan for 2025 and 31 accompanying draft laws is scheduled for the 4th of December.