Romania Income Tax Rate 2026: 10% Flat Rate

Romania's 10% income tax applies to taxable salary after mandatory employee-side social contributions, which in Romania are calculated and deducted before the income tax base is established. This differs from Bulgaria's approach where income tax is applied to the gross. The effect is that Romania's effective income tax rate as a percentage of gross salary is slightly below 10%, because contributions reduce the base first.

Social contributions in Romania are significant: pension contributions (CAS) are 25% of gross, and health insurance (CASS) is 10% of gross salary. These are mandatory employee deductions calculated before income tax. The combination means the total deductions from gross salary in Romania are higher than the 10% income tax alone would suggest, though the income tax itself remains the lowest in the EU.

Romania has a growing technology sector, particularly in cities like Bucharest, Cluj-Napoca, and Timisoara. The combination of EU membership, a large pool of engineering talent, and low income tax has attracted significant outsourcing operations and a number of technology companies. For professionals in these cities working for foreign-denominated companies, the tax environment is competitive within the EU.

For EU nationals considering a move to Romania for employment, the low income tax rate is offset to some degree by high social contribution rates. When comparing total deductions from gross against other European countries, Romania's total mandatory deductions (income tax plus employee contributions) are not as low as the 10% headline figure suggests — but income tax specifically is among the lowest.