2026 Payroll Calculation – New Rules, Taxes, and Changes

The changes made in the 2026 payroll calculation rules have brought important innovations for employees in Azerbaijan. The new system offers a lower tax burden and a more transparent mechanism for income tax, social insurance, and mandatory medical insurance.

This article provides a full explanation of 2026 payroll, tax rates, and salary deductions.

1. 2026 Income Tax – New Rates

Starting from 2026, income tax for those working in the non-oil sector has been reduced.

• Up to 2500 AZN → 3%
• 2500 – 8000 AZN → 75 AZN + 10% (of the amount exceeding 2500 AZN)
• Above 8000 AZN → 625 AZN + 14% (of the amount exceeding 8000 AZN)

• Up to 2500 AZN → 14%
• Above 2500 AZN → 25%

2. DSMF (Social Insurance) 2026

2026 social insurance rates are as follows:

• Up to 200 AZN → employee 3%, employer 22%
• 200 – 8000 AZN → employee 10%, employer 15%
• Above 8000 AZN → employee 10%, employer 11%

This system is progressive and changes as the salary increases.

3. Mandatory Medical Insurance (ITS) 2026

According to the new rules:

• Up to 2500 AZN → 2%
• On the part exceeding 2500 AZN → 0.5%

4. Unemployment Insurance

There are no changes in this area:

• Employee → 0.5%
• Employer → 0.5%

These updates increase employer accountability and require modern HR management systems to ensure full compliance with the law.