Russia is set to implement a new progressive personal income tax framework that will affect residents from 2025 onward. The government, led by President Vladimir Putin, has enacted legislation that creates a five‑tier scale for personal income tax. This marks a shift from a uniform rate to a tiered system that adjusts based on annual earnings. Under the new rules, the lowest tax rate remains at 13 percent for individuals earning up to 2.4 million rubles in a year. For earnings between 2.4 million and 5 million rubles, the rate rises to 15 percent. In the bracket from 5 million to 20 million rubles, the tax is 18 percent; for incomes between 20 million and 50 million rubles, it increases to 20 percent; and for annual income above 50 million rubles, the rate reaches 22 percent. This structure aims to align the tax burden more closely with the ability to pay, reflecting a broader objective of tax progressivity within the Russian system.
The legislation specifies that the new schedule becomes effective on the date the law is officially published. In parallel discussions, the Ministry of Labor has presented proposals that could modify who pays tax and how exemptions are applied. Among the suggestions is the potential exemption from personal income tax for certain groups of people with disabilities, specifically those classified as the first group. The document also considers benefits tied to length of service and the way earnings are factored in when calculating pensions for working disabled individuals. These ideas indicate a broader approach to social protection that could interact with the tax reform.” The new framework is positioned within a wider debate about balancing fiscal needs with social support as the country navigates changes in its economic landscape.
Earlier in Russia, there were discussions about maintaining an effectively zero personal income tax for individuals earning at the minimum wage, a policy that reflected targeted relief for lower-income workers. The current reform attempts to broaden that relief by preserving a lower rate for the smallest income bracket while introducing higher rates for higher income levels. For residents of other economies, including Canada and the United States, the shift illustrates a common trend in tax policy where governments explore tiered rates to fund public services while trying to minimize the impact on workers at the bottom of the income spectrum. Analysts in North America often compare such models to progressive tax structures already in place, noting how the balance between efficiency, equity, and administration can influence overall economic incentives. As these discussions unfold, businesses and individuals both inside Russia and abroad watch for how the new rates will be applied in practice, how compliance will be managed, and how the changes may affect international financial planning and cross-border taxation considerations.