Lithuania to implement tax changes and face infrastructure funding challenges

Starting in January 2026, Lithuania will implement significant changes to personal income tax (PIT) and real estate taxation. The government aims to increase tax revenue to fund defense, healthcare, and infrastructure. The new PIT structure will feature an increased progressive scale, including a potential third tier for very high earners. While the standard 20 percent rate remains for most, the threshold for the 32 percent rate is expected to shift, making it more sensitive to average and higher incomes.

Simultaneously, Lithuania faces ongoing challenges regarding transport infrastructure. Despite an increase in the Road Maintenance and Development Program budget to over 206 million euros for 2026, inflation and rising costs are limiting the actual volume of work that can be completed. Local authorities report that approximately 80 percent of citizen complaints directed to mayors concern roads, sidewalks, and lighting. Audrius Klišonis, president of the Lithuanian Municipal Association, noted that while major highways and bridges are being addressed, the overall condition of the road network remains a critical issue for both state and municipal budgets.