The draft state budget for 2026 outlines Bulgaria's fiscal framework at a key moment - the first year in which the country will officially prepare all budget documents in euros on the path to eurozone membership. The report of the Ministry of Finance (MoF) shows strict adherence to fiscal discipline with a deficit of 3% of GDP for 2026, which will be maintained in the next two years. To keep the deficit within 3%, the government forecasts revenues to reach 42.8% of GDP, and expenditures - 45.8%. Gross domestic product is expected to reach 120.1 billion euros with real growth of 2.7%. The state debt is planned to reach 37.6 billion euros, or 31.3% of GDP.
From January 1, 2026, the social security contribution to the "Pensions" fund of the Public Private Partnership is expected to increase by 2 percentage points. The minimum social security income is set at 620.20 euros, and the maximum social security income is set at 2,352 euros. The minimum wage is expected to increase from January 1, 2026 to 620.20 euros.
Social Minister Borislav Gutsanov announced to the media that it is planned that maternity benefits in the second year will be 900 leva. Pensions will be increased according to the law - according to the Swiss rule in the summer of 2026.
The draft budget of the Health Fund for 2026 is increasing by 34 million euros, announced the Chairman of the Supervisory Board of the NHIF Yavor Penchev. He explained that the change in the draft budget of the NHIF was necessary due to the change in the growth of the minimum wage.
The 2026 budget is a budget of the coalition government with difficult consensuses on the parameters of the macro framework. Because of this, the employers' forecasts are more apocalyptic. According to the unions, despite the record revenues and expenses, the budget is realistic. But they see another problem - the money set aside for income growth is not enough. What united employers and unions is that the cabinet has not coordinated the budget plan with either of them.
The insurance policy for the period 2026-2028 provides:
From January 1, 2026, the insurance contribution to the "Pensions" fund of the state social insurance (DOO) is increased by 2 percentage points, and from January 1, 2028 — with 1 more point; The minimum social security income for self-employed persons will be 620.20 euros; The maximum social security income increases to 2352 euros in 2026, 2505 euros in 2027 and 2659 euros in 2028.The main social policies for the period are as follows:
Increase in the amount of the minimum wage (MW) from January 1, 2026 to 620.20 euros; Increase in the amount of the benefit for raising a child up to 2 years of age to 460.17 euros for the entire period up to 2028 inclusive; Increase in the amount of the cash benefit for raising a child up to 8 years of age by the father (adoptive parent) to 460.17 euros for the entire period up to 2028. including; The amount of the cash compensation for non-use of pregnancy and childbirth leave under Art. 50a of the Social Insurance Code, for non-use of leave for raising a child up to 2 years of age under Art. 54 of the Social Insurance Code and for non-use of leave for adopting a child up to 5 years of age under Art. 53d of the Social Insurance Code is increased from 50 percent to 75 percent; Pensions for labor activity granted by December 31 of the previous year are updated from July 1 of the relevant year under Art. 100 of the Social Insurance Code or the so-called "Swiss rule";Increase in personnel costs in the budget sphere for 2026 by 5 percent, and for certain sectors - in accordance with the current regulatory framework and policies in the sectors;Increase in funds for delegated activities in education in connection with the continuation in 2026 of the policy of increasing the salaries of pedagogical specialists to reach an average salary of no less than 125 percent of the average salary for the country in order to stimulate the entry of young and qualified teachers into the system of preschool and school education;Funds in the budgets of municipalities have been increased as a result of the changed natural indicators in the sphere of activities delegated by the state in the fields of culture, social services, healthcare, etc.Child benefits and allowances in 2026
No increase for the third consecutive year in benefits for children with permanent disabilities, although adults with disabilities will receive an increase of 19.7%.
Benefits for children with disabilities (from 2026):
For 90 and over 90% disability – 604 euros (now 1180 leva)For 70-90% disability – 292 euros (now 570 leva)For 50-70% disability – 231 euros (now 450 leva)The last increase was in 2024. Benefits for adults with disabilities are increasing to 435.48 leva per month, which is an increase of 71.82 leva or 19.7%.
Monthly child benefits from January 1, 2026
The benefits will be granted to families with an average income per family member of up to 415 euros (811 leva) for the previous 12 months, compared to 760 leva now.
Amounts:
For one child – 26 euros (now 50 leva)
For two children – 57 euros (now 110 leva)
For three children – 85 euros (now 165 leva)
For four children – 90 euros (now 175 leva)
For each subsequent child, the benefit increases by 11 euros (20 leva so far).
For twins, the amount remains 39 euros (now 75 leva).
One-time birth benefits:
For the first child – 192 euros (now 375 leva)
For the second child – 461 euros (now 900 leva)
For the third child – 231 euros (now 450 leva)
For the fourth and each subsequent child – 154 euros (now 300 leva)
One-time aid for students:
Remains unchanged – for first to fourth grade and eighth grade it will be 154 euros (now 300 leva). There is no expansion of the scope, despite the proposals of the BSP.
Tax benefits (unchanged):
For one child – 3067.75 euros (now 6000 leva)
For two children – 6135.50 euros (now 12,000 leva)
For three and more children – 9203.25 euros (now 18,000 leva)
For a child with a disability – 6135.50 euros (now 12,000 leva)
In tax policy, the main changes are:
♦ Doubling the tax on dividends from 5 to 10%
♦ Increasing the excise duty on cigarettes and tobacco products
♦ Expanding the scope of goods with high fiscal risk and electronic tracking of transport
♦ Mandatory reporting of sales through software approved by the National Revenue Agency is also envisaged.
The increase in the dividend tax: What it means for people and business in the first budget in euros
The 2026 budget will be Bulgaria's first in euros, but also the first with a double tax on dividends - from 5% to 10%. The government claims that this will limit the shadow economy, but businesses warn of the opposite effect - less investment and lower competitiveness, Vesti.bg indicates.
What is the dividend tax?
The "Dividend" tax is paid on the income that company owners receive from distributed profits. In other words - it is a tax on part of the profit that companies share with their shareholders or partners. Currently, the rate is 5% - one of the lowest in the European Union.
What will change from 2026
The draft budget for 2026 provides for an increase in the tax on dividends from 5% to 10%. The measure is motivated by the intention of the ruling party to limit the shadow economy, as according to them, the lower rate has so far allowed the accumulation of "black funds" and unreported cash in some companies.
The Deputy Speaker of the National Assembly and leader of the "BSP - United Left" Dragomir Stoynev confirmed to the Bulgarian National Radio that the Joint Management Council is of the opinion that the tax on dividends should be increased to 10%. His argument is that the higher tax will help limit the shadow economy, since at a lower rate companies would accumulate “black coffers“ with unreported cash.
What the business says
The chairman of the Bulgarian Chamber of Commerce and Industry Kiril Domuschiev sharply criticized the BSP's proposal to double the tax on dividends. In a post on “Facebook“ he stated that there is no connection between the higher tax and reducing the shadow economy, and such a measure will only harm growth.
“What MP Stoynev said is false - both in terms of data and logic“, Domuschiev pointed out. According to him, the expected revenue from the tax - about 174 million leva - is insignificant, but the effect on business will be serious.
“Raising the rate will reduce the desire for investment and kill innovation - that's why Europe is lagging behind the US and China. Bulgaria does not have the buffer of rich countries to afford such mistakes“, he warned.
How much money does this tax bring to the state
According to data from the Ministry of Finance, revenue from the dividend tax in 2024 was 125 million leva, with an increase of 36.6% compared to the previous year. Despite the increase, the amount remains a minimal part of the total budget revenues.
The Ministry of Finance specifies that these revenues depend on the decisions of companies whether to distribute dividends at all, as well as on the general state of the economy.
The Economic Context
Economic growth in 2024 was revised by the National Statistical Institute from 2.8% to 3.4%, but according to experts, this is mainly due to domestic consumption and rising salaries in the public sector – factors that will not persist after the adoption of the euro in 2026.
A slowdown in income and consumption is expected, making any new tax burden more sensitive.
The Chief Economist of the Institute for Market Economics (IME), Lachezar Bogdanov, warned the Bulgarian National Radio that such changes undermine confidence in tax stability:
„Today they may be small, but if the trend continues, the government will not avoid the people's discontent.“
Where are we compared to Europe
According to data from Tax Foundation Europe, the average tax rate on dividends in the European Union is 21%.
The leaders with the highest levels are Ireland, Denmark, the United Kingdom, Norway and France – between 34% and 51%.
Bulgaria is currently among the six countries with the lowest tax (5%), along with Greece and Georgia. If the rate increases to 10%, the country will catch up with Slovakia and take 10th place in Europe.
Pressure from unions
The Confederation of Bulgarian Trade Unions also demands a higher tax on dividends – even 15%, combined with a 15% corporate tax. According to the union, this will “reduce the incentive for evading social security contributions“.
The mandatory introduction of SUPTO: a new blow to business
The Ministry of Finance proposes that from January 1, 2026, all traders must use state-approved sales management software (SUPTO). The measure, included in the draft budget for 2026, affects about 200,000 traders and aims to limit turnover evasion. According to the Ministry of Finance, it could bring in an additional 320 million euros per year, and the potential effect is estimated at up to 1 billion euros. The project was published late and leaves businesses with only two months to prepare, while the process of adapting to the euro is ongoing.
Main problems for businesses
Short deadline - two months for replacing the software and adapting to the euro. Large scale - nearly 200,000 merchants against only 4,300 with approved SUPTOs. High costs - replacement, integration, training, which affects small businesses the most. Complex certification - requires test bases and individual settings for each site. Uncertainties in online trading - platforms such as eBay and Amazon may stop operating if they do not register with the NRA.According to the Ministry of Finance, the change aims to prevent manipulation and unissued fiscal documents, but there is no impact assessment and cost accounting for businesses that have already invested in the transition to the euro.
Background
A similar attempt was made in 2019-2020 with Regulation H-18, but after a decision by the Supreme Administrative Court, the obligation was dropped. Then, as now, it is stated that SUPTO is used by less than 4,300 operators, while the remaining 200,000 will have to change their systems.
Reactions
Deputy Ivaylo Mirchev (DB) described the requirement as “impossible to implement“, and Boyko Borisov (GERB) stated that the budget will not be changed. The Bulgarian Business Software Association has described the return of SUPTO as “absurd“.
Consequences and costs
Software companies warn of an expensive and cumbersome procedure that will increase prices and burden small traders in particular. With online sales, there is a risk that part of the activity will become illegal.
What is SUPTO
SUPTO is software for managing sales in a commercial facility – any system that processes sales data, is connected to fiscal devices and is used for cash or card payments.
Implementation requires the selection of certified software, registration with the National Revenue Agency, training and ongoing support. Non-compliance is subject to sanctions or suspension of activity.
Priority by sector: security and healthcare
The draft state budget for 2026 and the medium-term forecast until 2028 show clearly allocated priorities in the security and healthcare sectors. The Ministry of Defense receives a significant increase in funding related to the modernization of the army, the Ministry of Interior maintains a stable budget with a main focus on personnel costs, while the National Health Insurance Fund directs funds to ensure minimum salaries for medical specialists.
Ministry of Defense
For 2026, the budget of the Ministry of Defense amounts to 2.657 billion euros. Of this amount, 1.71 billion euros are earmarked for current expenses, including personnel salaries, which themselves amount to over 1.43 billion euros. A significant share - 946 million euros - is capital expenditures aimed at acquiring new equipment, modernization and maintenance of military capabilities. Among the priorities for 2026 are the ongoing payments under international contracts for a new type of combat aircraft and for the “Stryker“ combat vehicles.
The defense budget does not remain fixed during the period. In 2027, it increases to 2.89 billion euros, and in 2028 it reaches 3.13 billion euros, which reflects the multi-year commitments made for modernization and implementation of allied standards.
The funds earmarked for military higher education institutions are retained as targeted transfers - a total of 51 million euros, intended for the Military Academy “G. S. Rakovski“, the National Military University “Vasil Levski“, the Higher Naval School in Varna and the Higher Air Force School in Dolna Mitropolia.
Ministry of Interior
The budget of the Ministry of Interior for 2026 amounts to 2.317 billion euros and remains relatively stable over the next two years - 2.313 billion euros in 2027 and 2.299 billion euros in 2028. The structure of expenditures clearly shows that the ministry operates mainly in a maintenance and operational mode. Almost all resources in 2026 are directed to current expenses, and employee salaries represent the main part of them - over 2.17 billion euros. Compared to defense, capital expenditures are minimal - about 28 million euros, intended for machinery, equipment and fleet renewal.
This shows that at the Ministry of Interior, the key factor remains human resources - police officers, firefighters, border guards and crisis response teams.
National Health Insurance Fund
The draft budget of the NHIF for 2026 amounts to 5.537 billion euros, having been increased by 34 million euros compared to the initial version. The increase is related to the planned increase in the minimum wage and the effect on social security payments.
A particularly significant change is the guarantee of minimum basic monthly salaries for medical specialists. From 2026, doctors and pharmacists without a specialty must receive no less than 1,860 euros, which is 150% of the average salary. For nurses, midwives, laboratory technicians, rehabilitators and other specialists, the minimum salary will be 1,550 euros, or 125% of the average salary. 260 million euros have been allocated for this, part of which will be distributed directly to medical institutions, and the rest - through the National Framework Agreement between the NHIF and the Bulgarian Medical Association.
In the period 2026-2028, the state is directing increasingly significant resources to defense for the purpose of modernization and implementation of international commitments. The Ministry of Interior maintains stable funding with a main focus on maintaining the system and providing personnel, while the health system takes a step towards guaranteeing minimum incomes for medical specialists throughout the country. The overall picture shows a priority on the security and sustainability of key public systems.