PIT and insurance contributions: what has changed in 2025

In 2025 the rules for calculating PIT and insurance contributions changed. New rates appeared in the progressive scale, the taxation of regional coefficients and northern allowances was revised, the threshold for the increased rate on dividends was lowered - and that is not all. In this article we describe the main changes and help you understand how they affect the calculation of taxes and contributions.

What is PIT and how does it work?

PIT (personal income tax) is a tax withheld directly from the income of individuals who receive income in the Russian Federation. Individuals means Russian citizens, foreign citizens or stateless persons.

As a rule, individuals do not calculate and pay the tax themselves. This is mainly done by the organisations paying the income: they act as tax agents, calculate, withhold and transfer PIT to the state budget.

What is taxed?

• salary and other payments under employment contracts,
• payments under civil-law contracts (CLCs) for services and work,
• other income not exempt from taxation.

PIT is calculated within the calendar year, from1 January to 31 December.

Change 1: Three rates added to the progressive PIT scale and threshold limits changed

The approach and principle of calculation have not changed much. Legislators simply added variety to the current progressive tax scale in the form of three progressive rates and changed the threshold limits. So we are moving further away from a flat scale towards a progressive one, where the tax rate depends on the size of the taxpayer's earnings.

The PIT rate for income up to 2.4 million rubles a year remains at 13%. From 1 January 2025 increased rates apply to income above this limit (clause 2.1 of Article 210, clause 1 of Article 224 of the Tax Code of the Russian Federation).

PIT rates in force in 2024

PIT rates for salary income, CLC income and certain other income of residents in force from 1 January 2025

The increased tax rate applies not to the whole income but only to the amount above the thresholds.

Example:

How to account for an employee's income?

The Tax Code states that each employer must calculate PIT without taking into account income received from other employers (clause 3 of Article 226 of the Tax Code of the Russian Federation). At the end of the tax year, when all tax agents report to the tax inspectorate, the tax authority sees all the taxpayer's income, adds it up and determines the total income. If the amount exceeds the threshold, additional PIT is charged to the taxpayer.

Example:

The employee can check their total income independently in the taxpayer account. This is their responsibility, not the employer's: the employer cannot see all income from different payment sources.

Change 2: For northern employees the PIT tax base is split into two parts

From 2025 the taxation of income of employees receiving northern allowances and regional coefficients has changed significantly. The PIT tax base is now split into two parts:

• the base salary,
• regional coefficients and northern allowances.

Two different scales apply to them (clause 6.2 of Article 210, clause 1.2 of Article 224 of the Tax Code of the Russian Federation).

The base salary is taxed on a five-step scale

Residents' income in the part of the regional coefficient and northern allowances is taxed on a two-step scale

At the same time, for income ofnon-residentsin the part of the regional coefficient and northern allowances this progressive scale does not apply. They are subject to the five-step progressive scale.

The rates set by clause 1.2 of Article 224 of the Tax Code of the Russian Federation also apply to payments calculated from average earnings (for example vacation pay). Tax is calculated on the part of the payment calculated from the average salary relating to regional coefficients and allowances for work in those regions (Letter of the Federal Tax Service of Russia No. BS-4-11/739 of 28.01.2025).

Example:

New income code 2006: regional coefficients and percentage allowances to salary, pay (maintenance) of northern employees.

Change 3: The progressive scale threshold for dividends on residents' income was lowered

PIT on residents' dividends is calculated separately from other tax bases (salary, regional coefficients and northern allowances). The dividend rate is calculated separately. If during the tax year the tax agent pays dividends within 2.4 million rubles, the 13% rate applies. If higher, 15% applies to the excess.

The 2025 change is that the progressive scale threshold used to be 5 million rubles and is now 2.4 million rubles. The rates themselves have not changed (clause 6 of Article 210, clause 3 of Article 214, clause 1.1 of Article 224, clause 1.1 of Article 225 of the Tax Code of the Russian Federation).

Change 4: A progressive PIT scale applies to privileged categories of non-residents

In 2025 the income of non-residents, like that of residents, is subject to preferential rates from 13% to 22% depending on the amount of income. These rates apply to highly qualified specialist (HQS) non-residents, foreigners on a patent, resettlers, refugees or those granted temporary asylum and others (clause 3, clause 3.1 of Article 224 of the Tax Code of the Russian Federation).

The income of non-resident employees who do not belong to privileged categories is taxed at 30% (clause 2.2, Article 224, clause 3 of Article 224 of the Tax Code of the Russian Federation). Nothing has changed here in 2025.

Nothing has changed for non-residents' dividend income either: the rate remains 15% on the whole amount of income (clause 3 of Article 224 of the Tax Code of the Russian Federation).

Change 5: PIT on income of individuals working under civil-law contracts

The income of remote employees working from abroad under a civil-law contract is considered received in Russia if the work or services, or the granting of rights to use intellectual property results, were carried out using:

• the internet from the Russian national domain zone and network addresses,
• information systems whose technical means are located in the Russian Federation,
• hardware and software systems located in the Russian Federation.

At the same time at least one of the following conditions must be met:

• the individual is a Russian tax resident,
• payments are made by a Russian organisation in Russia or through a Russian bank,
• the source of income is Russian organisations, including private notaries and so on.

If the above conditions are met, the tax agent withholds PIT at the rate (13%-22%), and the tax residency of the recipient is irrelevant (subclause 6.3 of clause 1 of Article 208 of the Tax Code).

Nothing has changed for employees working from abroad under employment contracts. PIT must also be withheld from their income at 13% to 22% depending on the amount of income (even if the employee is not a Russian tax resident).

Change 6: Standard tax deductions for the second and subsequent children increased

From 2025 the standard child deductions have been increased: for the second child from 1,400 to 2,800 rubles, for the third and each subsequent child from 3 thousand to 6 thousand rubles. The deduction for the first child remains 1,400 rubles.

For guardians, trustees, foster parents and spouses of foster parents the deduction for a child with a disability rose from 6 thousand to 12 thousand rubles.

The income limit giving the right to the benefits was also increased, from 350 thousand to 450 thousand rubles.

The child tax deduction is now granted by the employer without an application if the relevant information is available. No application is required. However, if the taxpayer is receiving such a deduction for the first time, they must provide documents confirming the right to it: copies of the child's birth certificate, a certificate confirming disability or an ID document if the child has a disability.

It is also worth mentioning that a new standard PIT deduction now applies for meeting GTO standards, amounting to 18 thousand rubles a year. To receive it, you need to pass the GTO standards or confirm the badge received and undergo a preventive medical examination. The new deduction code is 150.

Change 7: The unified maximum base for calculating insurance contributions increased

For each employee the base is 2.759 million rubles (2.225 million rubles in 2024). The insurance contribution rate above the maximum base has not changed and is 15.1%. Below the maximum base it is 30% (Resolution of the Government of the Russian Federation No. 1457 of 31.10.2024).

Change 8: New preferential insurance contribution rates introduced for certain categories of taxpayers

Example:

These are the most common categories of taxpayers eligible for reduced contributions, but the list is not exhaustive.

You can check whether your organisation (sole proprietor) is in the Unified Register of Small and Medium-Sized Enterpriseson the tax service website.

Change 9: Funeral benefit is now paid through direct payments

Employers are no longer obliged to pay the social funeral benefit (Resolution of the Government of the Russian Federation No. 830 of 20.06.2024 "On the unified standard for providing the state service of awarding the social funeral benefit"). Relatives or other persons organising the funeral must now apply to the Social Fund of Russia (SFR) for the payment themselves.

Change 10: The rules for calculating late payment interest changed

From 1 January to 31 December 2025 organisations were given three rates for calculating late payment interest (Article 75 of the Tax Code of the Russian Federation):

For individuals, including sole proprietors, late payment interest remains 1/300 of the key rate of the Central Bank of the Russian Federation, and the period of delay does not affect them.

Change 11: Payment for days off on dismissal

If an employee worked on a day off or a public holiday, they may take an additional day of rest during the year or add it to their vacation.

If at the time of dismissal the employee has unused days of rest, the employer must pay the difference between the established pay for work on a day off or holiday and the amount already paid. This difference is paid for all days of rest when the employee worked on days off or non-working holidays and did not use them during their employment with that employer.

The changes took effect on 1 March 2025 (part 5 of Article 153 of the Labor Code of the Russian Federation).

In short: the main changes to PIT and insurance contributions in 2025

1. New rates (13%-22%) were introduced into the progressive PIT scale depending on income: up to 2.4 million rub. - 13%, from 2.4 to 5 million rub. - 15%, from 5 to 20 million rub. - 18%, from 20 to 50 million rub. - 20%, above 50 million rub. - 22%.
2. For residents' income in the part of regional coefficients and northern allowances a two-step tax scale remains (13%-15%). For non-residents in the part of regional coefficients and northern allowances a five-step tax scale applies (13%-22%).
3. Dividends: for residents the threshold for the progressive PIT scale was lowered from 5 million to 2.4 million rubles.
4. A five-step tax system applies to privileged categories of non-residents.
5. Clarifications were introduced on the conditions for working abroad for employees under civil-law contracts.
6. Deductions for the second and subsequent children, as well as for children with disabilities, were increased.
7. The base limit for calculating insurance contributions was increased from 2.225 million to 2.759 million rubles.
8. New preferential insurance contribution rates apply to SMEs, IT activity, NPOs and others.
9. The funeral benefit is now paid through the SFR rather than through employers.
10. Three rates for calculating late payment interest were introduced depending on the period of delay.
11. On dismissal the employer must pay compensation for unused days of rest.

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