How Income Tax Works in Romania (2026): Flat 10%, Personal Deduction and Dividends
Romania taxes employment income at a flat 10% rate applied to the taxable base -- gross salary minus mandatory social contributions (CAS and CASS, together 35% of gross) minus the personal deduction (deducere personala) where eligible. Dividends are taxed at 16% from 2026 and most capital gains at 3%. All rates are set by the Fiscal Code (Codul Fiscal); verify with ANAF (anaf.ro) or an accountant.
The flat 10% income tax rate and the taxable base
Romania applies a single flat rate of 10% personal income tax (impozit pe venit) to employment income. Unlike graduated systems common across the EU, every employee pays the same rate regardless of salary level. The 10% does not apply to the full gross salary. It is applied to the taxable base calculated as follows: Gross salary minus CAS (pension contribution, 25% of gross) minus CASS (health contribution, 10% of gross) minus personal deduction (deducere personala, if applicable) = Taxable base Income tax = 10% x taxable base Because social contributions reduce the base by 35% of gross before income tax is applied, the effective income tax burden as a percentage of gross is well below 10%. For an employee above the personal deduction eligibility threshold, income tax is effectively 10% x (gross x 0.65) = 6.5% of gross salary. Income tax is withheld at source by the employer each month and remitted to ANAF (Agentia Nationala de Administrare Fiscala, the National Agency for Fiscal Administration). Employees receiving only salary income from one employer generally have no separate annual filing obligation. The Fiscal Code can be amended by emergency government ordinance during the year, not only through the annual budget law. Always verify current rules with ANAF (anaf.ro) or a qualified accountant.
The personal deduction (deducere personala): eligibility and tapering
The personal deduction (deducere personala) is a monthly deduction from the taxable base available only at a primary workplace (locul de munca de baza). It does not apply to a secondary employer or to PFA self-employment income. Eligibility in 2026 is limited to employees whose monthly gross salary does not exceed approximately the minimum gross wage (salariul minim brut, SMB) plus 2,000 RON. The minimum wage is 4,050 RON from January through June 2026 and is expected to increase to approximately 4,325 RON from July 2026 -- these figures are indicative and should be confirmed against official government ordinances. The deduction is at its maximum when gross equals the minimum wage and tapers linearly to zero at the upper eligibility threshold (approximately SMB + 2,000 RON). The maximum monthly deduction is broadly up to 20% of the applicable SMB -- approximately 810 RON when SMB = 4,050 RON, or approximately 865 RON when SMB = 4,325 RON. These are approximate figures; the exact formula and amounts are set by fiscal ordinance and should be verified for each pay period. Supplementary deductions apply for employees aged under 26 and for employees with dependent children, further reducing the taxable base. The precise supplementary amounts depend on the number of dependents and the ordinance in force at the time of calculation. All personal deduction figures and thresholds in this guide are approximate and provisional. Verify the exact amounts with ANAF (anaf.ro) or a payroll accountant.
Dividends, capital gains and other investment income
Not all income categories are taxed at the 10% employment rate. Romania applies separate rates to investment and passive income: Dividends: taxed at 16% from 2026, increased from the previous 8% rate. This applies to dividends paid by Romanian companies to individual resident shareholders. The rate change reflects legislation enacted as part of the 2025 fiscal consolidation package. Capital gains (gains on securities, fund units and similar instruments): taxed at 3%, a separate rate introduced in the same reform cycle. The 3% applies to the net gain (selling price minus acquisition cost and transaction fees). Capital losses cannot be offset against dividend income. Interest income: subject to a withholding tax; verify the current rate with ANAF (anaf.ro) as it may differ from the 10% salary rate. Rental income and other self-employment income outside PFA may be taxed on a norm-of-income basis (norma de venit) or a real-income basis depending on the income category and the taxpayer's election. This guide focuses on employment (salary) income. For planning around dividends, capital gains or rental income, consult a qualified Romanian tax accountant. Always verify with ANAF (anaf.ro) or an accountant.
Worked example: estimating take-home pay
The following is an approximate illustration only. Figures are rounded and based on provisional 2026 rates -- confirm with ANAF (anaf.ro) or payroll software before relying on any number. Scenario: employee at primary workplace, monthly gross salary 5,000 RON, no dependents, minimum wage assumed at 4,050 RON (January--June 2026). Upper deduction eligibility threshold: approximately 4,050 + 2,000 = 6,050 RON. Gross of 5,000 RON is within the eligible band, so a tapered deduction applies. The exact tapered amount depends on the official formula; for illustration assume approximately 350 RON. CAS (pension): 25% x 5,000 = 1,250 RON CASS (health): 10% x 5,000 = 500 RON Personal deduction (tapered, estimated): approx. 350 RON Taxable base: 5,000 - 1,250 - 500 - 350 = 2,900 RON Income tax: 10% x 2,900 = 290 RON Total employee deductions: 1,250 + 500 + 290 = 2,040 RON Estimated net (take-home): approx. 2,960 RON The employer additionally pays CAM at 2.25% of gross (approximately 112.50 RON) as an employer-side cost not deducted from the employee. This example is for illustration only. Use ANAF-approved payroll software or consult an accountant for accurate calculations.
Staying up to date: ANAF and professional advice
Romania's Fiscal Code is amended frequently -- sometimes by emergency government ordinance mid-year rather than only at the annual budget. The minimum wage, personal deduction formula, and contribution rates described in this guide are based on publicly available PwC Romania and Accace 2026 fiscal guides; some values are reconstructed or provisional. For authoritative, current information: - ANAF (anaf.ro) publishes the Fiscal Code, implementing regulations, and taxpayer guidance in Romanian. - The Ministry of Finance (mfinante.gov.ro) announces major fiscal changes. - A qualified Romanian accountant (contabil autorizat) can advise on your specific situation and flag any changes enacted after this guide was written. This article is informational only and does not constitute tax or legal advice. Always verify with ANAF (anaf.ro) or a qualified accountant.
FAQ
What is the income tax rate on salaries in Romania in 2026?
The flat rate is 10%, applied to the taxable base after deducting CAS (25% of gross) and CASS (10% of gross) and, where eligible, the personal deduction (deducere personala). The effective income tax as a percentage of gross salary is lower than 10% because social contributions reduce the base first. Verify current rates with ANAF (anaf.ro) or an accountant.
Who qualifies for the personal deduction (deducere personala) in 2026?
The deduction is available only at a primary workplace and only for employees whose monthly gross salary does not exceed approximately the minimum wage plus 2,000 RON (indicatively around 6,050 RON Jan--Jun 2026 or 6,325 RON Jul+ 2026 -- provisional figures). The deduction tapers linearly to zero at the upper threshold. Supplementary amounts are available for employees under 26 or with dependent children. Verify exact amounts with ANAF (anaf.ro) or a payroll accountant.
How are dividends taxed differently from salary in Romania?
Dividends paid to individual resident shareholders are taxed at 16% from 2026, up from the previous 8%. Salary income is taxed at a flat 10% on the net base after CAS and CASS. Capital gains on securities are taxed at 3%. These are separate taxes applied at different rates; a dividend from a company you own is not subject to the 10% employment rate. Always verify with ANAF (anaf.ro) or a tax adviser.
Does an employee need to file an annual tax return for salary income in Romania?
Generally not, if salary is the only income source and it comes from one employer. The employer withholds and remits income tax monthly. However, if you have multiple income sources (salary plus rental income, investment income, or foreign income), an annual declaration may be required. Check your specific situation with ANAF (anaf.ro) or a Romanian accountant.
⚠️ Informational estimate, not tax advice. Payroll software may differ in edge cases. Verify with a professional.