On September 6 and 7, 2025, Greek Prime Minister Kyriakos Mitsotakis stood before the nation at the Thessaloniki International Fair and unveiled what he described as a transformative €1.6 billion tax reform package—one that he hopes will not only ease the burden on millions of Greeks but also arrest his government’s plummeting approval ratings amid a cost-of-living crisis, persistent inflation, and rising public dissent. According to Reuters and the Associated Press, the sweeping set of tax cuts and incentives is designed to touch almost every corner of Greek society, from young workers and pensioners to large families and rural residents.
The centerpiece of Mitsotakis’s announcement was a 2-percentage-point reduction for all income tax brackets except the lowest (9%) and highest (44%). A new 39% tax rate will apply to incomes between €40,000 and €60,000—income that had previously been taxed at the top rate. For low-income families with four children, the reform brings an even more dramatic change: zero tax liability. Young people under 25 earning less than €20,000 per year will pay no tax at all, while those aged 25 to 30 will see their tax rates significantly reduced. The government estimates that about four million citizens stand to benefit from these measures, including the middle class, large families, and pensioners.
"This is not a pork barrel fest," Mitsotakis insisted during his keynote speech, as reported by the Associated Press. Still, he made clear that the package was about boosting as many incomes as possible—an unmistakable nod to the political stakes ahead of the next national election, which must take place by July 2027.
The reforms, scheduled to take effect in 2026, are to be financed through a combination of robust economic growth, a higher-than-expected budget surplus, and improved tax collection. Mitsotakis emphasized Greece’s commitment to fiscal stability, noting that the country’s primary budget surplus—excluding debt servicing—had created room for maneuver even within the spending constraints imposed by the European Union. "We remain committed to fiscal stability at a time of global turbulence where tariff wars shake whole economies," Mitsotakis said, according to AP.
Beyond income tax, the package includes a host of targeted incentives. Residents of small islands with populations under 20,000 will pay 30% less in value added tax (VAT), and property taxes in villages and remote areas will be slashed or eliminated altogether, in a bid to encourage migration away from Greece’s crowded cities. The government is also taking steps to address the country’s chronic housing shortages, planning to build new apartments on former army bases.
Pensioners and wage earners are expected to see the impact of these changes reflected in their pay slips as early as January 2026. The reforms also include pension increases and, for those earning income from rents, a significant reduction in tax rates—though Mitsotakis was quick to note that the incomes declared from rent are "almost absurdly low."
Underlying these fiscal maneuvers is a stark demographic challenge. Greece’s birthrate stands at just 1.4 children per woman, well below the replacement level of 2.1, raising alarms about the country’s long-term sustainability. According to AP, Greece’s population is projected to fall from its current 10.2 million to well under 8 million by 2050, and in 2021, the median age of 44.7 was the seventh highest in the world. The government hopes that by favoring families—especially those with three or more children—it can help reverse this trend and secure the nation’s future.
Yet, the timing and scope of the reforms have drawn skepticism and, in some quarters, outright anger. The announcement coincided with large protests in Thessaloniki and Athens, where thousands took to the streets over low wages, high living costs, and what many see as the government’s failure to deliver justice for the 57 victims of the deadly 2023 train crash. Reuters reported that approval ratings for Mitsotakis’s party have tumbled from 41% in 2019 to just 22–25% in recent polls, battered by allegations of corruption and inadequate crisis response.
Three separate protests—one by unions, one by a pro-Communist group, and one by the extreme left—were staged on September 6, 2025. Police estimated attendance at over 16,000, more than doubling the turnout from the previous year. While the demonstrations were mostly peaceful, their size and intensity reflected the depth of public frustration. Many protesters voiced anti-government slogans, and there were also expressions of solidarity with the Palestinian cause.
The opposition has seized on the delayed implementation of the tax cuts—set for 2026—as evidence that Mitsotakis is more interested in political optics than immediate relief. Critics argue that by postponing the benefits, the government risks undercutting its own efforts to win back trust from a population weary of promises and slow to see results. Moreover, Greece’s high public debt remains a looming vulnerability, even as the country enjoys robust growth and budget surpluses. Economists warn that any fiscal loosening must be carefully managed to avoid jeopardizing hard-won stability.
Still, the prime minister’s allies point to a broader European trend, where governments are increasingly turning to fiscal policy to address voter anxiety over purchasing power, inequality, and demographic decline. Mitsotakis’s package, they argue, is both a response to immediate pressures and a long-term investment in Greece’s social fabric.
For rural Greece, the incentives to migrate away from urban centers could be transformative—if, that is, the government succeeds in creating real opportunities for housing and employment outside the cities. Past efforts to revitalize the countryside have often faltered due to underdeveloped infrastructure and lack of jobs. This time, officials hope that the combination of tax relief, property incentives, and new housing projects will tip the balance.
For young Greeks, many of whom have struggled with unemployment and stagnant wages since the debt crisis, the prospect of zero or reduced taxes could offer a much-needed boost. But some remain wary, recalling previous reforms that failed to deliver on their promises. Pensioners, too, are watching closely, having borne the brunt of austerity measures in the past decade.
The government’s challenge now is to turn legislative ambition into tangible improvement in people’s lives. The tax cuts are set to be incorporated into the 2026 national budget, which will be voted on by Parliament in December 2025. Until then, Mitsotakis must navigate a tricky political landscape, balancing the demands of fiscal discipline with the urgent need to restore public confidence.
As Greece looks ahead to 2026, the stakes could hardly be higher. The success or failure of Mitsotakis’s tax reform package may well determine not just the fate of his government, but the trajectory of the country for years to come.
