On Thursday, 4 December, the Saeima adopted the State budget for 2026 and the budget framework law for the next three years in the final reading.
Consolidated State budget revenues are planned at EUR 16.1 billion in 2026, while expenditures will reach EUR 17.9 billion. Planned State revenues for next year are EUR 944.6 million higher than in the 2025 budget, while expenditures are EUR 804.3 million higher. The budget deficit in 2026 is planned at 3.3 percent of GDP, an increase compared to the projected 2.9 percent deficit this year, mainly due to a significant rise in funding for strengthening national defence and security, long-term support for Ukraine, and investments in strengthening public safety.
“This year we began a gradual transition to a goal-oriented budget. Increasing funding for strengthening our national defence capabilities is a concrete example of this process. A clearly defined goal, supported by the overwhelming majority of Latvian citizens, with targeted investments allocated to it. Another example is the introduction of changes in the funding procedure for municipal schools, or Programme at School, with the aim of ensuring that every child has access to high-quality education throughout Latvia,” previously emphasized Anda Čakša, Chair of the Budget Committee, during the budget review process.
A total of EUR 693.5 million in additional funding will be allocated to national security, support for families with children, and quality education, which have been defined as the main national priorities in 2026. In order to achieve this, base expenditures of ministries have been reviewed, resulting in savings of EUR 233 million. Over the next three years, expenditures are planned to be reduced by another EUR 814 million, according to the annotation of the draft law.
An additional EUR 448.3 million will be allocated next year for strengthening national security, taking into account the geopolitical situation. This funding includes not only investments in strengthening military capability, but also in internal security and cybersecurity. Funds will be directed towards the acquisition of equipment and technology, the training and capacity development of soldiers and National Guard members in accordance with modern security requirements, and the construction of anti-mobility and border protection systems. Further investments will be allocated to the development of the defence industry and to assist municipalities in border regions.
An additional EUR 94.8 million is planned in 2026 to strengthen support for families with children and to optimize the material resources for children in out-of-family care. The childbirth allowance will increase from the current EUR 421.17 to EUR 600 next year, while the monthly childcare allowance will rise from EUR 171 to EUR 298. Support for guardians and adoptive parents will also increase. Guardians’ monthly allowance will rise from EUR 54.07 to EUR 298, while the one-time adoption payment will rise from EUR 1,422.87 to EUR 2,433. Guardians of children who are not employed will be covered by state social insurance.
In order to ensure access to quality education for all children in Latvia, regardless of their place of residence or school size, supplementary funding has been allocated to the education sector. An additional EUR 45 million are planned for the introduction of the new Programme at School teacher remuneration model, which also covers support staff for teachers.
Additional funding of EUR 105.4 million is planned in 2026 for other measures, including expanding palliative care services to allow seriously ill patients to receive such care at home, improving rehabilitation services for victims of violence, and long-term care provision. State-funded outpatient and inpatient services for maternal and child health care will also be expanded, free pharmacist consultations in pharmacies will be provided for persons with Group I disabilities, and patients will no longer have to pay a fee for prescription drug purchases of less than EUR 10.
Support is planned for farmers to strengthen the agricultural sector’s competitiveness and to ensure access to quality local food products for residents. Additional funding is planned for the provision of healthy school meals made from local products.
In the labour sector, continuing previously initiated changes, the non-taxable minimum of the personal income tax will increase by EUR 40 in 2026, reaching EUR 550 per month, while the minimum wage will rise from EUR 740 to EUR 780.
Changes in taxation planned for next year aim to create a fairer tax environment for entrepreneurs—an alternative model for both corporate income tax and personal income tax will be introduced in order to balance the tax burden between foreign and domestic investors. Companies will have the option to operate in accordance with a 15% tax rate, along with a 6% tax on dividend income.
In order to mitigate the impact of price increases on the purchasing power of the most vulnerable residents, from 1 July 2026 and for one year, a reduced VAT rate of 12 percent will apply to bread, milk, eggs and fresh poultry meat.
Changes from next year will also affect the excise tax. In order to ensure additional revenues for the State budget and reduce the consumption of products that harm the environment and health, excise tax rates will increase for alcoholic beverages, tobacco products, non-alcoholic beverages and energy drinks. From 2028, a reduced rate will no longer apply to fuel used by companies in free ports and special economic zones.
The Saeima supported additional funding in 2026 for various measures, including EUR 150,000 to support the operation of the internet platform ManaBalss.lv, EUR 59,500 to preserve the memory and history of Latvian national soldiers, EUR 67,500 to purchase smoke detectors for families at social risk, and support for volunteer firefighters who organize educational and practical activities during visits to residents and schools.
The Saeima decided to allocate an additional EUR 20,000 to support persons who were repressed during the communist regime, as well as EUR 12,000 to ensure the operation of the Livonian House of the People in Mazirbe.
The law on the State budget will enter into force on 1 January 2026.
Saeima Press Service