As part of its ongoing tax reforms, Serbia has announced an adjustment to the non-taxable income threshold for salaries, effective from 1 January 2025. The monthly threshold will rise from RSD 25,000 to RSD 28,423, allowing employees to retain more of their income.

Key Changes

1. Effective date: 1 January 2025
2. Previous threshold: RSD 25,000 per month
3. New threshold: RSD 28,423 per month
4. Tax rate: 10% flat rate on income exceeding the threshold

This adjustment means that the first RSD 28,423 of an employee’s monthly salary will not be subject to personal income tax.

Practical Impact for Employees

For employees, the increase translates into higher take-home pay. For instance, if an employee earns RSD 80,000 per month, only the portion above RSD 28,423 will be taxed at the standard 10% rate. While the change may appear modest, the annual impact provides meaningful financial relief and greater disposable income.

Considerations for Employers

Employers and HR departments should update payroll systems to reflect the new threshold. Timely adjustments are essential to ensure compliance with the new regulations and to communicate the changes clearly to staff.

Broader Context

The increase in the non-taxable threshold is part of Serbia’s broader strategy to improve the business environment and strengthen the competitiveness of its labor market. By reducing the tax burden on workers, the government aims to support household income and enhance overall economic stability.

Conclusion

The 2025 adjustment of the non-taxable income threshold to RSD 28,423 marks a positive step for both employees and the wider economy. It provides immediate benefits for workers while reinforcing Serbia’s commitment to tax policies that encourage growth and fairness.