Albania income tax 2026: the 13% and 23% rates and why the minimum wage pays nothing

Albanian salary tax is worked out on an annual base. You take the year’s employment income, subtract a basic deduction, and tax what is left at 13% up to ALL 2,040,000 and at 23% above it. The basic deduction depends on how much the person earns:

• Annual employment income up to ALL 600,000: deduction of ALL 600,000
• From ALL 600,001 to ALL 720,000: deduction of ALL 420,000
• Above ALL 720,000: deduction of ALL 360,000

The rules come from Law No. 29/2023 “On Income Tax”, which replaced the 1998 law from 1 January 2024 and has since been amended, including by Law 81/2025. Albanians call the tax tatimi mbi të ardhurat personale, or TAP.

Two features set it apart from many other systems. First, the deduction falls as income rises, in steps rather than gradually. Second, the base is gross pay: the employee’s 9.5% social insurance and 1.7% health insurance are not subtracted before tax is calculated. An employee on ALL 80,000 a month is taxed on ALL 80,000, not on what is left after contributions.

An annual example shows the mechanics. A project manager on ALL 100,000 monthly, so ALL 1,200,000 over twelve months, is above ALL 720,000, so the deduction is ALL 360,000. Taxable income is ALL 840,000, all inside the 13% band, which gives ALL 109,200 of tax for the year, or ALL 9,100 a month.

Monthly withholding is simply one twelfth of the annual calculation, which is why the monthly table in the next section produces exactly the same result over a full year of steady pay.

Employers do not run the annual sum every month. They use a withholding table expressed in gross monthly pay, which builds the deduction in:

• Up to ALL 50,000: no tax
• ALL 50,001 to 60,000: gross minus ALL 35,000, taxed at 13%
• ALL 60,001 to 200,000: gross minus ALL 30,000, taxed at 13%
• Above ALL 200,000: ALL 22,100, plus 23% of each lek beyond ALL 200,000

Some reference points, all monthly and all at 2026 rates:

• ALL 55,000 gross: tax ALL 2,600
• ALL 80,000 gross: tax ALL 6,500, leaving net pay of ALL 64,540 after contributions
• ALL 120,000 gross: tax ALL 11,700
• ALL 200,000 gross: tax ALL 22,100
• ALL 250,000 gross: tax ALL 33,600

Seen as a share of gross pay, the tax stays modest across most salaries. It is about 8.1% at ALL 80,000, 9.75% at ALL 120,000 and 11.05% at ALL 200,000. Only above that does the 23% band pull the average up, to about 13.4% at ALL 250,000. Contributions of 11.2% (less above the social insurance cap) sit on top, so total deductions at mid-range salaries come to around a fifth of gross.

The ALL 35,000 and ALL 30,000 figures are the monthly versions of the annual deductions of ALL 420,000 and ALL 360,000. At ALL 200,000 a month the two formulas meet: 13% of ALL 170,000 is ALL 22,100, which is where the 23% band takes over.

Albania’s minimum wage rose to ALL 50,000 gross a month on 1 January 2026, the level fixed by VKM 776, a government decision adopted on 19 December 2025. Over a year that is exactly ALL 600,000, which is also the size of the largest basic deduction. Taxable income is therefore zero.

A minimum-wage employee still pays contributions: ALL 4,750 of social insurance and ALL 850 of health insurance a month, leaving net pay of ALL 44,400. But no income tax is withheld, and none is due at year end if that is their only income.

The January 2026 rise was large: a quarter, from ALL 40,000. The contribution floor moved with it to ALL 50,000, so every employer paying at the bottom of the scale saw both gross pay and contributions jump on the same day, while the tax-free status of the minimum stayed intact because it falls inside the ALL 600,000 deduction.

This matters to employers in two ways. It makes entry-level pay go further for the employee than the gross figure suggests, since 88.8% of it reaches their account. And it means any role paid at or near the minimum sits right next to the first step in the tax scale, which is where offers and raises need care. The wage background is covered in our article on the Albanian minimum wage.

The threshold is a step, not a slope. One lek above ALL 50,000 a month, the annual income passes ALL 600,000, the deduction falls to ALL 420,000 from ALL 600,000, and tax jumps from nothing to about ALL 1,950 a month.

In net terms, an employee on ALL 50,000 takes home ALL 44,400. Raise them to ALL 50,001 and they take home roughly ALL 42,451: almost ALL 1,950 less for a one-lek raise. Net pay only climbs back to ALL 44,400 at a gross salary of about ALL 52,573 a month.

A smaller step sits at ALL 60,000. At that salary tax is ALL 3,250 and net pay ALL 50,030. At ALL 60,001 the deduction falls again and tax becomes about ALL 3,900, so net dips to around ALL 49,381; it recovers at roughly ALL 60,858.

The practical rule for pay reviews is simple:

• Avoid raises that land between ALL 50,001 and about ALL 52,600 a month
• Avoid raises that land between ALL 60,001 and about ALL 60,900 a month
• Show the candidate or employee the net figure before agreeing a new gross salary
• Remember that a one-off bonus can push a single month over a step

None of this changes the employer’s cost, which still rises with gross pay. It changes what the employee sees, and a raise that shrinks a payslip is a poor way to reward anyone.

On a steady salary, 23% applies only to monthly pay above ALL 200,000. In annual terms that is ALL 2,400,000 of income, less the ALL 360,000 deduction, which lands exactly on the ALL 2,040,000 top of the 13% band. Someone earning exactly ALL 200,000 each month therefore never reaches the 23% rate.

Bonuses change the picture because Albanian payroll lumps them in with the salary for the month of payment and taxes the combined figure. Add a ALL 60,000 December bonus to an ALL 80,000 salary and that month is taxed on ALL 140,000: ALL 14,300 instead of the usual ALL 6,500, so the bonus itself loses 13%. For someone already at ALL 200,000, every lek of a bonus is taxed at 23%.

At higher pay the annual and monthly views still agree. Someone on ALL 250,000 a month earns ALL 3,000,000 a year; less the ALL 360,000 deduction, ALL 2,640,000 is taxable. The first ALL 2,040,000 at 13% gives ALL 265,200 and the remaining ALL 600,000 at 23% gives ALL 138,000, a total of ALL 403,200, which is twelve months of ALL 33,600.

The effect is mostly a matter of timing for steady earners, but it can surprise people, and it makes the December payslip look very different from November’s. Explain it when the bonus is announced. For the employer’s view of a ALL 200,000 salary, see the developer salary breakdown for Tirana.

Beyond the basic deduction, two optional deductions exist for employees. Each dependent child under 18 brings a deduction of ALL 48,000 a year, claimed by one parent only. Education costs for dependent children can be deducted up to ALL 100,000 a year where annual income is no more than ALL 1,200,000. Both are claimed once a year through the employer.

Picture a parent of two whose salary is ALL 80,000 monthly, or ALL 960,000 for the year. The child deductions add up to ALL 96,000. Taxable income falls from ALL 600,000 to ALL 504,000, and the year’s tax from ALL 78,000 to ALL 65,520, a saving of ALL 12,480. Since the claim runs through the employer once a year, payroll needs the details of the children and confirmation that the other parent is not claiming as well.

Most employees with one job never file a personal return; withholding settles their tax. The annual individual return, known as DIVA, is mandatory in some cases, for example after a year with more than one employer, in which case the employee pays or reclaims the difference.

Residency decides the scope. Albania claims tax on a person’s worldwide income once they count as resident: 183 days or more in the country in one calendar year is enough, and so is having their centre of vital interests there. A non-resident is taxed only on income from Albanian sources. That applies to foreign hires as much as to Albanians, and a residence permit does not settle the question by itself. Remote hires who move to Albania are covered in our guide to permits for remote staff.

The employer is the withholding agent. Each month it calculates tax from the table, deducts it from gross pay with the employee’s contributions, and declares everything on the listëpagesa (monthly payroll list) filed with the General Directorate of Taxes (DPT). The filing and the payment share a deadline: the 20th day after the salary month closes. DPT’s own guidance is on tatime.gov.al.

Offers are where most misunderstandings start. Albanian candidates tend to think in net monthly pay, whereas every official document, from contract to payslip to DPT return, speaks in gross. Put both numbers in writing, and if the role sits near ALL 50,000 or ALL 60,000, check the step effect before you send it.

Getting the table right is routine; getting the edges right takes attention. Bonus months, mid-month starters, unpaid leave and the child deductions all change the figure, and errors land on the employee’s payslip first.

If you employ in Albania without a company of your own, Employer of Record Albania runs this for you: your hire is employed on our Albanian payroll, and we calculate and withhold tax, file the listëpagesa and pay DPT. The monthly fee for this is from €599 per employee per month. The full monthly routine is described in how Albanian payroll runs, and the first-hire sequence in EOR onboarding in Albania.