Albania Personal Tax Guide: Progressive IIT 0-23% 2026
Albania applies a progressive personal income tax (IIT) system with rates of 0%, 13%, and 23%. The first ALL 60,000 of monthly employment income is tax-free. Income between ALL 60,001 and ALL 200,000 is taxed at 13%, and income above ALL 200,000 per month is taxed at 23%. Here is how Albanian personal tax works in 2026.
Individual Income Tax in Albania is governed by Law No. 8438 and subsequent amendments. The tax is administered by Drejtoria e Përgjithshme e Tatimeve (DPT), the General Directorate of Taxation. The tax year is the calendar year. Residents are taxed on worldwide income, while non-residents are taxed only on Albanian-source income. Albania's progressive system is designed to be competitive in the region, with a relatively high tax-free threshold compared to average wages. Check residency rules →
Real-world example: An employee earning ALL 150,000 per month pays 0% on the first ALL 60,000 = ALL 0, and 13% on the remaining ALL 90,000 = ALL 11,700. Monthly IIT: ALL 11,700. Effective tax rate: 7.8%. For a high earner at ALL 350,000/month: 0% on ALL 60K, 13% on ALL 140K = ALL 18,200, 23% on ALL 150K = ALL 34,500. Total IIT: ALL 52,700/month. Effective rate: 15.1%. Compared to regional peers, Albania's top rate of 23% is lower than Greece (44%), Italy (43%), and Croatia (30%). Social contributions are separate →
Personal Income Tax Rates 2026
- 0% — Monthly income up to ALL 60,000 (tax-free threshold)
- 13% — Monthly income from ALL 60,001 to ALL 200,000
- 23% — Monthly income above ALL 200,000
The annual equivalent: ALL 720,000 tax-free per year. The progressive bands apply to employment income, business income for individuals, and other personal income. There is no separate surtax or solidarity contribution. Albania does not have a joint filing system for married couples — each individual files separately.
Taxable Income Categories
Albanian IIT applies to several categories of income:
- Employment income: Salaries, wages, bonuses, allowances, benefits-in-kind — all subject to progressive IIT via payroll withholding
- Business income: Self-employed individuals and sole proprietors are taxed at progressive IIT rates or may opt for simplified regimes
- Rental income: Income from property leasing is taxed at progressive IIT rates after allowable deductions
- Investment income: Dividends, interest, and royalties have separate withholding tax rates rather than being included in progressive IIT
- Capital gains: Gains on real estate and securities have separate rules (see capital gains guide)
Employment income is subject to monthly withholding by the employer. The employer deducts IIT and social security contributions before paying the net salary. Employees receive a payslip showing gross pay, deductions, and net pay. Annual filing requirements →
Tax Credits and Deductions
Albania offers limited tax credits and deductions for individuals:
- Personal allowance: The ALL 60,000/month threshold serves as the primary personal allowance
- Social security contributions: Employee contributions (pension + health insurance) are deductible from taxable income
- Health insurance premiums: Voluntary health insurance premiums paid by the individual may be deductible
- Education expenses: Certain tuition fees and vocational training costs may qualify for deduction
- Mortgage interest: Interest on primary residence mortgage may be deductible within limits
- Charitable donations: Donations to registered non-profits are deductible up to a percentage of income
Tax deductions generally require documented expenses and are subject to annual limits. The DPT provides specific guidelines on which deductions are allowable. Many deductions require prior approval or registration.
Social Security Contributions
Employees in Albania must contribute to the social security system. The rates for 2026 are:
- Employee share: Approximately 11.2% of gross salary (9.5% pension + 1.7% health insurance)
- Employer share: Approximately 16.7% of gross salary (13.5% pension + 3.2% health insurance)
- Upper cap: Contributions are capped at approximately ALL 70,000 per month of insurable income
Contributions are calculated on gross salary up to the cap. The employer withholds both the employee and employer portions and remits them to the social security institute. The contributions fund the public pension system and state health insurance. Detailed social contributions guide →
Who must file an Albanian personal tax return?
Individuals with employment income only (where tax was fully withheld at source) generally do not need to file. Self-employed individuals, those with multiple income sources, or those earning above certain thresholds must file an annual return by April 30. Non-residents with Albanian-source income must also file.
Are bonuses and 13th-month salary taxed?
Yes, bonuses, commissions, and additional payments are treated as ordinary employment income and taxed at the progressive IIT rates. There is no special treatment for year-end bonuses, 13th-month salaries, or performance incentives. Employers include all cash and non-cash benefits in the monthly payroll calculation.
Is there a wealth tax or net worth tax in Albania?
No. Albania does not impose a wealth tax, net worth tax, or solidarity tax on individuals. Property transfer taxes apply on transactions, and there is a small annual tax on agricultural land, but no tax on total net worth. See the wealth tax guide for details. Wealth tax guide →