Estonia natural person income tax is considered to be proportional, but, due to basic exemption, it is actually progressive. Standard rate for natural persons in year 2015 is 20% (down from 21% in 2014). A basic exemption is granted, which is increased upon provision of maintenance to a child, in event of pensions, in event of compensation for accident at work or occupational disease. Additionally, a number of expenses are deductible: housing loan interests, training expenses, gifts, donations, contributions to a voluntary/mandatory funded pension and unemployment insurance, social security payments mandatory in a foreign state. Amount of deductible housing loan interest, training expenses, gifts and donations is limited – in 2011, the limit was 3196 euros but no more than 50% of the taxpayer's income during the same period of taxation.
