On September 6, 2025, Greek Prime Minister Kyriakos Mitsotakis took to the stage at the Thessaloniki International Fair to announce a sweeping 1.6 billion-euro ($1.87 billion) tax reform package. The annual economic policy speech, a tradition for Greek leaders, is typically a chance to set the tone for the coming year. This time, Mitsotakis’s message was clear: after years of economic pain and persistent cost-of-living pressures, the government is aiming to put more money back into the hands of ordinary Greeks—especially families, young people, and pensioners.
"We are all well aware that Greeks are struggling to make ends meet. Therefore our non-negotiable priority is to prop up their income," Mitsotakis declared during his keynote address, as reported by Reuters. It was a speech heavy on gifts, as the Prime Minister himself acknowledged, designed to benefit as many as four million citizens and, perhaps not coincidentally, to shore up support for his center-right New Democracy party ahead of the next national election, which must be held by July 2027.
The tax reform, set to go into effect in 2026, is ambitious in both scope and intent. According to The Associated Press, most income tax brackets—except for the lowest (9%) and highest (44%)—will see their rates cut by two percentage points. A new 39% rate will apply to incomes between 40,000 and 60,000 euros ($46,800–$70,200), replacing the current top rate for that segment. For low-income families with four children, the tax rate will drop to zero—a nod to Greece’s worrying demographic trends.
Young people stand to benefit significantly. Those under 25 earning less than 20,000 euros ($23,400) annually will pay no income tax at all, while those aged 25 to 30 will see their tax bills sharply reduced. Pensioners, too, will see increases in their payments. Property tax for remote areas will be scrapped, and residents of small islands (with populations under 20,000) will pay 30% less in value added tax. Village residents can expect to see property tax reductions over the next two years, and those earning income from rents will also benefit from lower rates—though Mitsotakis wryly noted that declared rental incomes are "almost absurdly low."
Beyond the tax rates themselves, the package contains measures aimed at tackling Greece’s housing shortage, particularly for young people and families. One plan involves building new apartments on former army bases, a practical solution that could help ease the pressure in urban centers. The government hopes these steps will not only address rising housing costs but also encourage young people to move out of big cities into the countryside, helping to revitalize rural communities.
All these reforms will be incorporated into the 2026 national budget, which is due to be voted on by Parliament in December 2025. If all goes according to plan, wage earners and pensioners should see the changes reflected in their pay slips by January 2026.
But why such a strong focus on families and young people? The answer lies in Greece’s severe demographic problem. The country’s birthrate stands at just 1.4 children per woman, far below the replacement level of 2.1. At this rate, Greece’s population—currently about 10.2 million—could fall to well under 8 million by 2050. The median age, already 44.7 in 2021, is among the highest in the world. With a shrinking and aging population, the pressure on the social safety net and the economy as a whole is mounting.
Mitsotakis was candid about the challenges. As AP reported, he stressed that Greece remains committed to fiscal stability, even as it tries to boost disposable incomes and address inflation. The country’s economic recovery since the debt crisis of 2009–2018 has been impressive—tourism has boomed, and the economy is approaching its pre-crisis size. Still, Greece remains the most indebted nation in Europe, and disposable incomes continue to lag behind the EU average due to high prices for energy, food, and housing. Minimum wages have risen by 35% in recent years, but many Greeks still feel left behind.
Financing this tax cut package was no small feat. Mitsotakis credited strong economic growth, a higher-than-expected budget surplus, and improved tax collection for making it possible, even as the government remains bound by spending constraints set by the European Union. "This was not a pork barrel fest," AP noted, but the timing and scope of the reforms suggest a keen awareness of the upcoming national elections and the government’s slipping poll numbers. New Democracy’s ratings have dropped to around 22–25% in recent months, a sharp decline from the 41% of votes it won in 2019. The cost-of-living crisis and recent corruption allegations have clearly taken their toll.
Not everyone is convinced that the reforms go far enough—or that they address the root causes of public frustration. On the same day as Mitsotakis’s speech, Thessaloniki saw a series of large, mostly peaceful protests. According to Reuters and AP, more than 16,000 people took to the streets, a significant increase from previous years. The demonstrators, organized by various trade unions and political groups, called for higher salaries and better living standards. Many also voiced support for Palestinians, adding an international dimension to the day’s events.
While the protests were largely peaceful, their size and intensity underscored the depth of public discontent. For many Greeks, the pain of the debt crisis still lingers, and the benefits of economic recovery have not been evenly shared. As one protester told Reuters, "We want decent wages and a future for our children." The message was echoed by union leaders, who argued that the government’s measures, though welcome, do not go far enough to address the daily struggles of ordinary people.
Still, the government is betting that its new package will make a difference. By targeting middle-class families, young people, and pensioners—groups that have borne the brunt of the crisis—Mitsotakis hopes to rebuild trust and momentum ahead of the 2027 election. Whether the reforms will be enough to reverse the slide in popularity remains to be seen.
In the end, the Thessaloniki International Fair served as both a stage for policy and a barometer of public mood. Mitsotakis’s tax cuts are bold, but the coming months will reveal whether they are enough to turn the tide for Greece’s embattled households—and for the government itself.
