On Thursday, December 4, the Saeima adopted the 2026 state budget and the budget framework law for the next three years in the final readingu.
Next year, the revenues of the consolidated state budget are planned to be 16.1 billion euros, while the expenses are 17.9 billion euros. Compared to the 2025 budget, next year’s planned state revenues are planned to be 944.6 million euros higher, while expenses are planned to be 804.3 million euros higher. The budget deficit next year is planned to be 3.3 percent of the gross domestic product, and its increase compared to the projected deficit of 2.9 percent this year is mainly determined by a significant increase in funding for strengthening national defense and security, long-term support for Ukraine, and investments in strengthening public security.
“This year, we started a gradual transition to a goal-oriented budget. Increasing funding to increase our state’s defense capabilities is a concrete example of this process. A clearly defined goal, which is supported by the absolute majority of Latvian citizens, and targeted investments for it. The second example is the introduction of changes to the financing procedure for municipal schools, or the “Program in the School” funding, with the aim of ensuring that every child in Latvia has access to high-quality education,” previously emphasized during the budget review chairman of the commission Anda Čakša.
Next year, national security, support for families with children and high-quality education have been determined as the main priorities of the state, with a total of 693.5 million euros of additional funding planned for them. In order to ensure this, the basic expenses of the ministries were revised, resulting in a saving of 233 million euros. In the next three years, expenses are planned to be reduced by another 814 million euros, according to the annotation of the draft law.
Next year, 448.3 million euros have been additionally allocated to strengthening national security, taking into account the geopolitical situation, and this funding includes not only the strengthening of military capabilities, but also investments in the country’s internal security and cyber security. The funds have been directed to the purchase of equipment and machinery, training and capacity building of soldiers and national guardsmen in accordance with modern security requirements, and the construction of anti-mobility and border protection systems. Also, additional investments are for the development of our defense industry, as well as support for municipalities of border counties.
Additional funding in the amount of 94.8 million euros in 2026 is intended to strengthen support for families with children, as well as to improve material support for children in non-family care. Next year, the allowance for the birth of a child will be increased to 600 euros from the previous 421.17 euros, and the childcare allowance will increase from the previous 171 euros to 298 euros per month. Support for guardians and adoptive parents has also been increased, including compensation for guardians – from the previous 54.07 euros per month to 298 euros per month and the one-time compensation for the adoption of a child – from the previous 1422.87 euros to 2433 euros. Child guardians who do not work will be socially insured from the state budget.
In order to ensure access to quality education for all children in Latvia, regardless of the place of residence or the size of the school, additional funding has also been directed to the field of education. Additional funds in the amount of 45 million euros are planned for the implementation of the new “Program in the School” funding model for teachers’ wages, including support staff for teachers.
Additional funding – 105.4 million euros – is also planned for other measures next year, including the expansion of palliative care services, enabling seriously ill patients to receive this service at home, and the improvement of rehabilitation services for victims of violence and ensuring long-term care. State-paid outpatient and inpatient services for mother and child health care will also be more extensive, as well as provided free pharmacist services in pharmacies for disabled persons of the first group and when purchasing prescription drugs up to 10 euros.
Support is also intended for farmers in order to promote the competitiveness of the sector and ensure the availability of quality local food products to the population. Additional funding is also planned to provide healthy meals from local products in schools.
In the field of labor force, continuing the previously initiated changes, next year the minimum wage exempt from income tax will be increased by 40 euros, reaching 550 euros per month, while the minimum wage will increase from the previous 740 euros to 780 euros.
Changes in taxes from next year are intended to create a fairer tax environment for entrepreneurs – an alternative income model for both companies and individuals will be introduced to balance the tax burden of foreign and domestic investors. Companies will be able to apply a tax of 15 percent, while dividend income – a tax of six percent.
On the other hand, in order to reduce the impact of price increases on the purchasing power of the less protected population, from July 1 of next year, for one year, bread, milk, eggs and fresh poultry meat will be subject to a reduced rate of value added tax of 12 percent.
Changes from next year will affect the application of excise tax. In order to ensure additional revenues in the state budget, as well as to reduce the consumption of products that are unhealthy for the environment and health, excise tax rates will be higher for alcoholic beverages, tobacco products, non-alcoholic and energy drinks. From 2028, the reduced rate will no longer be applied to fuel used by companies in free ports and special economic zones.
Next year, the Saeima has supported additional funding for various events, including 150 thousand euros for ensuring the operation of the “ManaBalss.lv” platform, 59.5 thousand euros for the preservation of the memory and history of national soldiers, 67.5 thousand euros for the purchase of smoke detectors for families at social risk, as well as for volunteer firefighters, so that educational events and practical classes can be held on trips to residents and schools.
The Saeima has decided to allocate an additional 20,000 euros to support the repressed population, as well as 12,000 euros to ensure the operation of the Libyan People’s House in Mazirbe.
The 2026 state budget law will enter into force on January 1 of the following year.
