Middle-class families will benefit from tax exemptions of up to €150 million a year under the overhauled tax system, the finance minister said on Monday.

News outlet Stockwatch published a written statement by Finance Minister Makis Keravnos. It was a response to a question submitted by MP Andreas Apostolou.

The MP had earlier asked Keravnos whether the composition/size of a family is a factor in taxing individuals in the planned tax reform. In effect, Apostolou was suggesting this should be the case.

In his response, dated October 10, the finance minister confirmed that family size has been taken into account.

Keravnos said the tax exemptions are based on models and calculations made by the Economics Research Centre of the University of Cyprus.

According to their calculations, the tax exemptions for families with children will come to €150 million a year.

The minister went on to give some examples. A family with an annual income up to €80,000 would receive a tax exemption of €1,000 per parent, per child – for each daughter aged 19 and under, and for each son aged 21 and under.

In the case of students, the tax exemption per child would likewise come to €1,000. If the student is a daughter, this applies to the ages of 19 through 23; and if a son, it applies to the ages of 21 through 24.

Additionally, according to Keravnos, single-parent families with annual income up to €40,000 would benefit the most from tax exemptions.

The minister cited one example, taken from a presentation made by the Economics Research Centre. Here, a family with a combined annual income of €56,184 and four children – currently paying €2,150 in income tax – would under the new system pay €1,654 less.

This reduction is greater compared to a family with three children – it would pay €1,454 less in income tax. Families with two children would pay €1,200 less, and families with one child would pay €800 less.

The administration has put forward a sweeping tax overhaul that it says will broaden the tax base, toughen enforcement and ease the burden on households and businesses.

The draft bills include an increase in the personal tax-free threshold to €20,500, up from €19,500 now. Income brackets will be revised, shifting the highest tax rate of 35 per cent to income over €80,000.

The new system would also raise corporate tax, and increase fines on tax debtors.

In recent remarks in parliament, while presenting the state budget for 2026, Keravnos said the six bills comprising the tax reform will be tabled to parliament by early November at the latest.

The government hopes to have the legislation passed before the end of the year, so that the new tax system gets rolled out at the beginning of 2026, as scheduled.