As of January 1st, 2025, new amendments of the Personal Income Tax Act have been presented by the Croatian government in the Parliament. Those changes include a further increase of the personal allowance, changes in tax rates and an increase of the threshold for the application of the higher income tax rate.
With the adopted amendments the Croatian government plans on further relieving the tax burden of individuals. Therefore, additional changes have been made regarding the recent changes in tax rates, an increase of the personal allowance and increasing the threshold for applying the higher income tax rates.
Four groups are created based on the size of the local self-government unit and the following minimal and maximal tax rates that can be determined in the decision of each local self-government unit:
| No. | Local self-government unit | Lower rate | Higher rate | ||
| minimum | maximum | minimum | maximum | ||
| 1 | Municipality | 15% | 20% | 25% | 30% |
| 2 | City with less than 30,000 inhabitants | 15% | 21% | 25% | 31% |
| 3 | City with more than 30,000 inhabitants | 15% | 22% | 25% | 32% |
| 4 | City of Zagreb | 15% | 23% | 25% | 33% |
With these changes, each local self-government unit will decide if they will bring any changes to the 2 tax rates that are currently in power. In some cases, i.e. in Zagreb, the tax rates will be lowered by law, for the lower rate from 23,60% to 23% and for the higher rate from 35,40% to 33%.
Furthermore, an increase in the higher tax brackets is adopted. Namely, increase of the amount of the annual tax base on which the higher tax rate will is applied from €50,400 to €60,000 is adopted, that is, the amount of the monthly tax base is increased from €4,200 to €5,000.
The basic personal allowance is increased from €560 to the amount of €600. Coefficients used in the calculation of the increased personal allowance for dependent children and members of the family and disability are also changed. In accordance with the adopted changes, the amounts of the personal allowance are changed as shown below:
| Current situation (€) | Proposed amendments (€) | |
| Basic personal allowance | 560 | 600 |
| Dependent member | 280 | 300 |
| Dependent 1st child | 280 | 300 |
| Dependent 2nd child | 392 | 420 |
| Dependent 3rd child | 560 | 600 |
| Dependent 4th child | 784 | 840 |
| Dependent 5th child | 1,064 | 1,140 |
| Dependent 6th child | 1,400 | 1,500 |
| Dependent 7th child | 1,792 | 1,920 |
| Dependent 8th child | 2,240 | 2,400 |
| Dependent 9th child | 2,744 | 2,940 |
| Disability | 168 | 180 |
| Disability 100% | 560 | 600 |
According to the adopted amendments, a 100% income tax exemption on wages earned from employment for a period of five years was presented for returnees to Croatia is introduced. The condition for qualifying for this exemption includes having resided abroad for at least two years, with the additional requirement that the person must have previously deregistered permanent residence in Croatia or declared an early departure. This exemption also applies to Croatian citizens who have never registered permanent residence in Croatia.
Since 2014, a regulation has been in effect stipulating that individuals under the age of 30 that are being employed on a permanent basis are exempt from paying salary contributions for a period of 5 years since the day of employment, specifically mandatory health insurance contributions. This measure was intended to encourage the employment of younger workers.
As of January 1, 2025, this exemption is abolished. However, the provision exempting individuals without prior work experience from paying salary contributions during their first year of employment will remain in place. Additionally, individuals under 30 who are already employed on a permanent basis can utilize this exemption for a full period of 5 years from the date they register in the Croatian insurance system. The abolition of this exemption does not affect workers’ net salaries but will result in a higher payroll cost for employers.
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