More money in households’ pockets, with larger gains for lower-income earners and a significant drop in poverty rates — that’s the promise of Greece’s 2027 fiscal package. Analysis of the draft budget submitted to Brussels yesterday shows that the combination of tax cuts, wage and pension increases, and welfare enhancements could improve disposable income across the entire income spectrum. The greatest percentage benefit is estimated to go to the poorest households, while families with three or more children and elderly citizens stand to gain particularly significant advantages.
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According to a study by the Ministry of National Economy and Finance, the average annual equivalent disposable income is set to increase by 4.64% in 2027 compared to the 2026 baseline. This increase translates to an average of €701 per year, with the distribution of gains varying according to each household’s income level. For the poorest 10% of the population, the increase is estimated at 5.78%, or €274 per year. The second income decile sees a gain of €400, representing a 5.20% rise, while the third decile reaches €474, or 4.97%. In the fourth decile, the benefit is estimated at €561, reflecting a 5.01% increase. The picture shifts for higher earners. For the wealthiest 10% of the population, the increase is limited to 3.93%, but translates to €1,409 per year in absolute terms. As a result, higher-income households continue to gain more in absolute amounts, while lower-income groups show greater percentage improvement.
A broad-based benefit
A reduction in the overall tax burden plays a decisive role in shaping income changes. For the population as a whole, the relevant index falls by 0.3 percentage points under the 2027 scenario. The reduction is greater for lower-income groups, reaching 0.8 points in the first decile, while for the wealthiest 10% it is limited to just 0.1 points.
The measures include a reform of personal income tax, with a special provision for zero taxation on the first €20,000 of income for taxpayers with at least three dependent children, effective from tax year 2027. The same package includes a 0.5 percentage point reduction in employee social security contributions from April 2027, a measure that increases net take-home pay. At the same time, the minimum wage is set to rise from €920 to €960 in April, with corresponding increases planned for public sector pay. The package also includes a gross Christmas bonus of €500 for civil servants. For pensioners, the study incorporates a 2.8% adjustment to pensions, the uninsured elderly benefit, and related disability allowances included in the simulation. The thresholds for the pensioners’ solidarity contribution are adjusted accordingly.
Fighting poverty
The poverty projections are particularly noteworthy. Based on a fixed reference threshold, the proportion of the population falling below it drops from 16.9% by 2.2 percentage points under the 2027 scenario. This reduction reflects the estimated impact of the measures, provided that the study’s assumptions hold true. The greatest benefit is recorded for families with three or more children, where the poverty rate falls by 5.5 percentage points. For two-adult households with two children, the drop reaches 3.4 points — a result closely tied to the targeting of tax interventions at families with dependent children. A significant improvement is also seen among older age groups. For citizens aged 80 and over, the poverty rate falls by 4.4 points, as does that of single-person households headed by someone aged 65 or over. In the 65–79 age group, the reduction reaches 2.1 points. In contrast, for single-parent families with children the decline is limited to just 0.5 percentage points — a finding that highlights how, despite the overall improvement, certain groups continue to face heightened risk of financial vulnerability. The study also records a 3.7-point reduction in the child poverty rate for those under 14, and a 2.1-point drop in the 25–49 age group. Meanwhile, the poverty gap index — which measures how far the incomes of the poorest fall below the poverty threshold — narrows by 0.6 points, down from 4.7%.
Permanent measures
The package of measures announced at the Thessaloniki International Fair is estimated at approximately €2.2 billion for 2027. The cost of new permanent interventions not yet legislated at the time the draft was prepared is estimated at €2.27 billion, while permanent measures already enacted and in force since early 2026 amount to €5.48 billion. The government aims to finance these interventions while maintaining fiscal balance. For 2027, a primary surplus of 3.3% of GDP and an overall fiscal surplus of 0.3% are projected, while public debt is estimated to fall to 128.8% of GDP, down from 136.7% in 2026. The projections are based on the EUROMOD model and data from the 2024 income and living conditions survey, covering 2023 incomes and adjusted for subsequent years. The analysis focuses primarily on the direct impact of taxation, cash benefits, and social security contributions, and does not fully capture the effects of other interventions such as VAT changes and energy subsidies.
Published in Apogevmatini
