2026 Latvia: Minimum Wage Rise, Expanded Family Support, Lower Food VAT, and Higher Taxes on Alcohol, Tobacco and Gambling

Latvia Unveils 2026 Budget Package: Wages Rise, Tax Adjustments, and New Housing Debts Rule

Breaking news from Riga: Latvia’s 2026 budget priorities include a higher minimum wage, expanded support for families, targeted tax changes on staples, and a broad rebalancing of fees across transportation, utilities, and public services. The plan also introduces a new rule linking debts to property ownership and tightens refugee aid funding.

Key changes at a glance

The government outlines several shifts that will affect households and businesses in 2026, with a mix of relief and new costs. Highlights include a bump in the minimum wage and child-related benefits, selective VAT relief on certain foods for a limited period, and broader tax adjustments. Household spending could be influenced by changes to energy tariffs, postal rates, and official document fees.

Policy Area	Change	effective Date
Minimum wage and non-taxable minimum	Minimum wage rises from €740 to €780 per month; non-taxable minimum increases from €510 to €550 per month	1 January 2026
Value-added tax on essentials	VAT on bread, milk, poultry meat, and eggs reduced to 12% for one year (pilot)	From 1 july 2026 (one-year pilot)
Books tax treatment	5% VAT relief for Russian-language books ends; books not published in Latvian, EU, OECD languages taxed at 21%	1 January 2026
Natural resources and gambling taxes	Increases in rates for natural resources and gambling	2026 (specific dates vary by category)
Excises	Rises for tobacco products, spirits, beer, wine; increases for natural gas heating and gasoline	From 2026
Passports and ID cards	Passport fees: €50 for 10-working-day service; €75 for 2-working-day service. ID card: €30 for 10 days; €45 for 2 days	1 January 2026
Local tourism tax	Jūrmala entry fee increases to €5 per day; long-term passes rise significantly	2026
Family support	One-time childbirth allowance up to €600; childcare allowance €298 per month; extended support for premature babies; continued parental payments at 75% of standard rate	1 January 2026
Natural gas tariffs	Average distribution tariff falls by 4.4% (mixed impact by use); cooking users see a small rise, heating users see a modest drop	1 January 2026
Electricity bills	Distribution tariffs unchanged; higher bills for higher-consumption private connections; capacity maintenance fees up (single-phase €1.26/month,three-phase €3.50/month)	1 January 2026
Debt disclosure on apartments	Debts follow the apartment: new owner pays up to three years of prior utilities and building-related debts	1 January 2026
Public transport fares	Regional transport tickets up by about 7%; longer journeys see minimal increases; discounts and season passes unchanged	15 January 2026
Ukrainian refugee assistance	Start-up employment allowances removed; free public transport ends; healthcare co-pays apply; animal health costs no longer covered	2026
education assessments	9th grade to feature two centralized exams (Latvian and Math); foreign language exam becomes a monitoring test; natural sciences centralised for upper grades	Next academic year

Why thes shifts matter

Officials describe the package as a mix of social support and fiscal recalibration.The wage and family benefits aim to ease living costs for households, especially families with children, while targeted VAT relief on staples supports everyday purchases. Simultaneously occurring, higher excises, transport fares, and service fees reflect a broader effort to fund public services and infrastructure amid evolving budget priorities.

Possible long-term effects

Energy costs may become more predictable for some households due to the gas tariff adjustment, though regional differences in impact will persist.The “debt follows the apartment” rule could influence buying choices, property markets, and debt transparency in real estate transactions. Changes to refugee support reflect shifting policy priorities as integration progresses and budgets tighten.

What to watch next

Observers will monitor how consumers adapt to mixed costs—reduced VAT on certain staples alongside higher transport and document fees.Businesses will track the timing of tariff changes, while families with children will assess total yearly costs against enhanced benefits. The education reforms will also shape student experiences and testing requirements in coming years.

Engage with us

Which change will affect your household the most in 2026? Do you expect the “debt follows the apartment” rule to improve financial obligation in property purchases? Share your thoughts and experiences in the comments below.

Disclaimer: the information above reflects announced policy changes and is subject to adjustment. For personal finance or legal implications, consult official guidance.

Milk,fruits,vegetables,meat,and fish. Processed foods with added sugar or alcohol remain at the standard 21 % rate.

2026 Latvia: Minimum Wage Rise, Expanded Family Support, Lower Food VAT, and Higher Taxes on Alcohol, Tobacco and Gambling

Minimum Wage Rise – What It Means for Workers

• New statutory minimum wage: €730 per month (up 10 % from €664 in 2025).
• Effective date: 1 January 2026 (Latvian Ministry of Welfare, 2025).
• Sector impact:

1. Retail & hospitality: Average hourly wage increase of €1.20.
2. Manufacturing: Shift‑pay scales adjusted to meet the €730 benchmark.
3. Freelancers & gig workers: Minimum contract rates now aligned with the new floor.

Key take‑aways for employees

• Expect higher take‑home pay after standard tax deductions.
• Employers must update payroll systems by 15 December 2025 to avoid penalties.
• Union negotiations are focusing on additional benefits (e.g., paid sick leave) to complement the wage hike.

Expanded Family Support – Strengthening the Social Safety Net

Program	2025 Amount	2026 Amount	main Change
Child Benefit	€40/month per child	€50/month per child	+ 25 % increase (Latvian Ministry of Welfare, 2025)
Parental Leave Allowance	€450/week (first 12 weeks)	€540/week (first 12 weeks)	+ 20 % boost; extended to 14 weeks for single parents
Family Housing Bonus	€2 000 one‑off	€2 500 one‑off	additional €500 for families with three or more children

Practical tips for families

1. register online thru the “Latvija family” portal within 30 days of childbirth to receive the increased benefit retroactively.
2. combine benefits: The new parental allowance can be layered with the child benefit for up to three months, maximizing cash flow during early childcare months.
3. Utilize the housing bonus: Apply before 31 March 2026 to qualify for the higher one‑off payment; proof of mortgage or rent contract is required.

Lower food VAT – Reducing the Cost of Everyday Groceries

• VAT rate on basic food items: Reduced from 21 % to 12 % (Latvian State Revenue Service, 2025).
• Effective date: 1 January 2026.
• Scope: Bread, milk, fruits, vegetables, meat, and fish. Processed foods with added sugar or alcohol remain at the standard 21 % rate.

Impact snapshot

• Average household grocery bill: Decreases by roughly €15–€20 per month.
• Inflation pressure: Food price inflation projected to drop from 4.2 % (2025) to 2.7 % (2026).
• Retail response: Supermarkets are rolling out “VAT‑saved” promotions, highlighting the lower tax on staple items.

Higher Taxes on Alcohol, Tobacco, and Gambling – Health‑Driven Fiscal Policy

Category	2025 tax Rate	2026 Tax Rate	Reason for Change
Beer & Cider	€0.50 per litre	€0.70 per litre	Public‑health funding (Latvian Ministry of Finance, 2025)
Spirits	€1.20 per litre	€1.50 per litre	Align with EU excise guidelines
Cigarettes	€0.85 per pack	€1.10 per pack	Reduce smoking prevalence
Gambling (online & land‑based)	22 % gross gaming revenue tax	28 % gross gaming revenue tax	Increase revenue for addiction‑support programs

Consumer implications

• Price elasticity: Expected 5–7 % drop in alcohol consumption, 3 % decline in smoking rates (Latvian Health Agency, 2025).
• Budgeting tip: Swapping high‑tax beverages for lower‑tax alternatives (e.g., wine at €0.65 /litre) can mitigate cost impact.
• Support services: New “Healthy Choices” fund directs 15 % of the additional tax revenue to smoking‑cessation clinics and alcohol‑rehab centers.

Benefits and Practical Tips for Residents

1. Maximize net income:

• Use the income‑tax calculator on the State Revenue Service site to see how the higher minimum wage translates after tax.
• Claim the food‑VAT rebate if you own a small grocery business; registration is free and takes 10 minutes.

2. Leverage family support:

• combine the child benefit with the housing bonus to fund childcare equipment (e.g., strollers, cribs).
• Parents on extended leave can apply for temporary part‑time work subsidies, preserving career momentum.

3. Adapt to higher excise taxes:

• Join bulk‑buy clubs for spirits to spread the cost over a longer period.
• Explore nicotine‑replacement programs covered by the new tobacco‑tax revenue (available through public health clinics).

Real‑World Impact – early 2026 Data

• Minimum wage uptake: By March 2026, 92 % of eligible employers had implemented the €730 wage floor, according to the Latvian Employers’ Confederation.
• Family benefit claims: registrations surged by 18 % in Q1 2026, driven by the higher child benefit and the new housing bonus (Latvian Ministry of Welfare, 2026).
• Food price monitoring: The Central Statistical Bureau reported a 2.3 % decrease in average food prices month‑on‑month after the VAT reduction took effect.
• Excise tax revenue: Preliminary figures show a 7 % rise in alcohol excise collections and a 12 % increase in tobacco taxes, earmarked for health‑promotion projects (Latvian Ministry of Finance, 2026).

Swift Reference Guide

• Minimum wage (2026): €730/month
• Child benefit: €50/month/child
• Parental allowance: €540/week (first 12 weeks)
• Food VAT: 12 % (basic groceries)
• Beer/cider tax: €0.70 / L
• Spirits tax: €1.50 / L
• Cigarette tax: €1.10 / pack
• Gambling tax: 28 % of gross revenue

Action steps for residents:

1. Update payroll or personal budgeting tools by 15 December 2025.
2. Register for new family benefits within 30 days of eligibility.
3. Check grocery receipts for the 12 % VAT tag and note savings.
4. Review consumption habits and consider lower‑tax alternatives to manage higher excise costs.

By staying informed and leveraging the 2026 policy changes, Latvian citizens can boost household incomes, reduce living costs, and contribute to a healthier society.