Amid continuous scandals and declining public trust, Greece’s Prime Minister Kyriakos Mitsotakis is expected to unveil a $1.65 billion relief package at the Thessaloniki International Fair on Saturday, aimed at easing the burden on the middle class and addressing growing public dissatisfaction. The plan combines tax cuts with targeted social benefits to support workers, families, and retirees who have been hit hardest by rising living costs.
All the measures the Greek Prime Minister is expected to announce will be included in the national budget 2025-2026 and are set to go into effect on January 1, 2026.
A focus on middle-class families in Greece
The primary target of the relief package is the middle class, which has carried a disproportionate burden during years of crisis and austerity. Families with children stand at the forefront of the government’s agenda, with significant tax adjustments expected to lighten their load. Mitsotakis is banking on these reforms to provide a tangible improvement in living standards and to signal that his administration is committed to fairness.
A major component of the package centers on lowering direct taxes. This approach, government sources say, guarantees that funds no longer collected by the state will remain with taxpayers, giving them greater disposable income. In this way, the government emphasizes, the reforms are not only socially just but also economically sound.
Sweeping tax relief
The most substantial portion of the package consists of sweeping income and property tax cuts set to benefit nearly four million taxpayers. The measures cover salaried employees, retirees, self-employed professionals, farmers, and property owners. Among the most important changes are:
- Higher tax-free thresholds: The basic tax-free allowance will rise from €8,632 (about $9,500) to €10,000 ($11,000) for salaried employees, retirees, and professional farmers.
- Expanded child allowances: Additional tax-free thresholds for dependent children will increase from €1,000 ($1,100) to between €1,500 and €2,000 ($1,650–$2,200).
- Lower tax rates: The tax rate on income between €10,000 ($11,000) and €15,000–€16,000 ($16,500–$17,600) will be cut to 15–18% from the current 22%.
- Reductions on higher brackets: For incomes above €40,000 ($44,000) and up to €50,000 ($55,000), the current rate of 44% will be reduced.
Government insiders also hint at a potential surprise measure: the complete exemption of income tax for large families with four or more children, at least for annual incomes up to €50,000 ($55,000). While such a move would cost between €25 million and €55 million ($27–$60 million), it would directly benefit roughly 20,000 to 22,000 households.
Property and rental income in Greece
Property owners are also in line for significant relief. Current tax rates on rental income range from 15% to 45%. The government is preparing to reduce the minimum rate on annual rental income of up to €5,000 ($5,500) from 15% down to as low as 5%–7%. This would translate into annual tax savings of $440–$550 for many property owners.
Officials are also considering further reductions for higher income brackets, meaning landlords with more substantial rental income could see even larger cuts. These changes are intended to ease the burden on property owners while encouraging long-term leases, a sector strained by challenges in Greece’s housing market.
Reducing “deemed income” burdens
Another critical reform involves a planned 30% average reduction in “deemed income” assessments, known in Greece as “living standards criteria” (Greek: “τεκμήρια”). This system often forces low-income earners—particularly the self-employed—to pay higher taxes than their actual income justifies.
By lowering these notional thresholds, the government expects more than 1.2 million taxpayers—salaried employees, retirees, and self-employed workers with modest earnings—to see real relief. For many, this reform addresses what has long been perceived as one of the most unfair features of the Greek tax system.
Fairer taxation for the self-employed
The government is also preparing adjustments to the controversial objective income criteria introduced for the self-employed. Key changes include:
- Taxation based on a single minimum wage benchmark for individuals with multiple businesses, rather than applying separate calculations for each business
- Expanded eligibility for reducing notional taxable income with offsetting sources, such as rental income, dividends, and capital gains
- Greater relief for new businesses in their early years of operations
- Reduced penalties for turnover levels exceeding industry averages
These measures aim to make the tax system more balanced, ensuring that small entrepreneurs and freelancers are not unfairly penalized by rigid policies.
Property tax (ENFIA) adjustments for Greece’s middle class
The unpopular annual property tax, ENFIA, is also set for revisions. Currently, partial or full exemptions apply only to households with relatively low incomes. The government is considering raising these thresholds so that more middle-class taxpayers benefit.
This means partial exemptions (50%) would extend to families earning above the current €9,000 ($9,900) threshold, while full exemptions could be widened for larger families and individuals with disabilities or special needs. For thousands of households, this would result in meaningful savings on an annual basis.
Pension reforms and wage increases
Pensioners are expected to benefit significantly, as the government moves to abolish the so-called “personal difference”—a mechanism that has prevented around 400,000 retirees from receiving the full benefit of annual pension increases. With the reform, all retirees will finally receive uniform percentage increases, restoring fairness to the system.
At the same time, Mitsotakis is poised to announce additional hikes in the minimum wage, public-sector salaries, and pensions starting in 2026. Current planning suggests a two-step increase in the minimum wage, beginning April 1, 2026, and continuing on April 1, 2027. Each increase would add roughly $33–$44 per month, with corresponding adjustments across public-sector salary scales and pensions.
This move is expected to boost incomes for a wide segment of society while signaling the government’s commitment to ensuring that economic growth is shared more widely.
Political and economic context
The government’s ability to deliver such a sweeping package is tied to strong fiscal performance. In the first seven months of 2025, Greece posted a primary surplus of nearly €8 billion ($8.7 billion), nearly double its target, while tax revenues exceeded forecasts by over €2 billion ($2.2 billion). Combined with flexibility on defense spending, these results created roughly $1.65 billion in fiscal space—funds that Mitsotakis is now channeling into direct support for households.
Beyond the numbers, the package represents a strategic effort to strengthen political trust. By targeting the middle class, families, pensioners, and property owners, the government hopes to deliver visible improvements to everyday life while reinforcing Greece’s image as a country on stable economic footing.
How Greece’s $1.65 billion middle class relief package was formed
The $1.65 billion package that Greek PM Mitsotakis will announce at the Thessaloniki International Fair stems from the state budget’s strong performance in recent months.
Tax revenues came in about $2.35 billion above projections, while the primary surplus reached nearly $8.7 billion—almost double the original target. These results created the necessary fiscal space, allowing the government to design a set of measures aimed at supporting Greece’s middle-class households and families.
The final figure is also reinforced by a second factor: the exemption of part of defense spending from strict expenditure limits. This adjustment frees up an additional $550 million, bringing the total package to roughly $1.65 billion.
With this combination, the government intends to present at the Thessaloniki International Fair a plan with tangible social impact—while remaining grounded in solid fiscal fundamentals to safeguard confidence in the Greek economy’s trajectory.
