Deductions reduce the taxable base before the standard rate is applied, and there are three: the personal deduction based on income level, the deduction for each dependent child under 18, and the deduction for education expenses. When the deductions are not claimed during the year through the employer, they are not lost, because they are calculated on the individual tax return and the difference is refunded.
This page shows how much each deduction is, how the personal deduction changes with income level, what conditions apply to the education deduction, what documentation is required, and how to claim the refund, with a sample calculated from start to finish.
Read also: Who must file the individual declaration and when.
The personal deduction applies once per individual and depends on annual income. The higher the income, the smaller the deduction, because the law designed it as a safeguard for low-income earners.
Personal deduction based on annual income
| Annual income | Personal discount |
|---|---|
| Up to 600,000 lek | 600,000 lek |
| From 600,000 to 720,000 lek | 420,000 lek |
| Over 720,000 lek | 360,000 lek |
For incomes up to 600,000 lek, the deduction covers the entire amount, so the taxable base is zero. This is why a low-income individual often has all the tax withheld during the year as a surplus for refund.
The employer grants the personal allowance during the year, dividing it by twelve and paying it each month once the individual has applied. On the annual return it is recalculated based on the individual's actual income for the entire year, and that's where the discrepancies appear.
For each dependent child under 18, the deduction is 48,000 lek per year. The deduction is multiplied by the number of children, so two children result in 96,000 lek and three children in 144,000 lek.
This deduction is not limited by income level. A high-income individual retains the full child deduction even when the education deduction no longer applies.
Children's discount based on the number of children.
| Dependent children under 18 years old | Annual discount | Savings at the rate of 13% |
|---|---|---|
| A child | 48,000 lek | 6,240 lek |
| Two children | 96,000 lek | 12,480 lek |
| Three children | 144,000 lek | 18,720 lek |
The savings column is a calculation made using the 13% rate on wages and shows the actual cash value of the deduction, not the deduction amount.
Read also: Discounts for children and educational expenses.
Education expenses are deductible up to 100,000 lek per year, provided the individual's annual income remains below 1,200,000 lek. When income exceeds this threshold, the education deduction does not apply at all, while the per-child deduction remains full.
The 1,200,000 lek threshold is the same threshold that triggers the obligation to file a return. The practical result is a group of individuals who are required to file returns precisely because they exceeded the income threshold, and for that very reason they lose the education deduction.
Caution. The category of expenses eligible for the education deduction, such as tuition, books, courses, or transportation, and the documentation required to prove them, must be confirmed in the implementing guidance before the return is completed. UNVERIFIED; must be confirmed before publication.
The deduction applies to expenses for the education of dependent children. The same due diligence applies to the age limit and type of educational institution, namely verifying the guidance before completion.
✔ Verification of withholding tax from each employer and payer
✔ Family certificate or document proving dependent child under the age of 18
✔ Invoices and payment slips for educational expenses, in the name of the parent or the child
✔ Copy of the discount request, when it was made through the employer during the year
✔ Electronic confirmation of the submitted statement
Documents aren't always attached to the portal, but they are stored. The tax administration may request them later, and deductions not supported by documentation risk not being recognized.
Individual with annual salary income of 1,000,000 lek, one child under 18, and education expenses of 60,000 lek. The income exceeds 720,000 lek, so the personal deduction is 360,000 lek. Add 48,000 lekë for the child and 60,000 lekë for education, so the deductions total 468,000 lekë. The taxable base becomes 532,000 lekë and the 13% tax yields 69,160 lekë.
Continuation of the same case. During the year the individual did not claim the child and education deductions, so the employer recognized only the personal deduction of 360,000 lekë. The tax withheld during the year was 83,200 lekë, based on a withholding rate of 640,000 lekë. With the return, the actual tax due is 69,160 lekë, so the refund is 14,040 lekë. The refund will be issued within 60 days.
The difference of 14,040 lekë does not arise from a new deduction, but only from the timing of the claim. A deduction not claimed during the year is a deferred deduction, not a lost one, provided that the return is filed.
The request for a deduction is made once a year to the employer acting as the withholding agent. He applies the deductions in twelfths per month, so the tax withheld from the salary is lower starting in January.
When an individual has two employers, the request is made to only one of them, because deductions are allowed once per individual, not once per employer. If both employers claim them, too little tax is withheld during the year and the tax return will show a balance due.
Read also: Rental income and investments on the individual tax return.
Child and education deductions are not claimed during the year or on the tax return, so the money remains unclaimed.
The education discount is still applied even when annual income exceeds 1,200,000 lekë, even though the legal requirement is not met.
The personal deduction is taken at 600,000 lekë without verifying income levels, and the taxable base is understated.
Child support is requested by both parents for the same child, without clarifying who has custody.
Deductions are requested from both employers, and at the end of the year a payment obligation arises instead of a refund.
The child turns 18 during the year, and the deduction is calculated in full without regard to the tax-year rule.
Receipts for education expenses are not kept, and the deduction remains unsupported in the event of an audit.
48,000 lek per year for each dependent child under 18, with no income limit.
600,000 lek when annual income is up to 600,000 lek, 420,000 lek from 600,000 to 720,000 lek, and 360,000 lek above 720,000 lek.
Up to 100,000 lek per year, only if the individual's annual income remains below 1,200,000 lek.
No. The child deduction remains at 48,000 lek per child. The 1,200,000 lek requirement applies only to the education deduction.
No. They are calculated on the individual return, and the difference is refunded within 60 days of the request.
The deduction is tied to the dependent child and is not doubled for the same child. When both parents claim it, the declarations risk adjustment, so it's predetermined who gets it.
Receipts and payment vouchers for the expenses, together with the document proving dependent child status. The exact list is checked in the applicable guidance before completion.
The real value is the discount multiplied by the rate. For a 48,000-lek discount at a 13% rate on wages, the savings are 6,240 lek.
Law No. 29/2023 “On Income Tax”, as amended, Article 22 on personal, child, and education deductions; Article 23 on requesting deductions through the agent; Article 24(1) on wage rate schedules; Article 26 on refund within 60 days; Article 67 on the obligation for individual declaration
Law No. 9920, dated May 19, 2008 “On Tax Procedures,” as amended, Article 65 on electronic filing.
General Instruction No. 26, dated September 8, 2023, as amended by Instruction No. 9, dated March 12, 2026
The text of Consolidated Law.
Income tax, General Directorate of Taxes.