Minimum Wage and Social Security Thresholds in 2025: What Is Important to Know?
In 2025, Bulgaria is introducing significant changes to labour and social security legislation that affect both employees and employers. These changes include an increase in the minimum wage and adjustments to the social security thresholds, which in turn lead to changes in tax obligations.
1. Increase in the minimum wage
As of 1 January 2025, the minimum wage in Bulgaria rises from BGN 933 to BGN 1,077, which represents growth of 15.4% or BGN 144.
This is the first time the minimum wage has exceeded the threshold of BGN 1,000. The decision is in line with the changes to the Labour Code, which provide for the minimum wage to be 50% of the average wage for the country.
The increase in the minimum wage is intended to improve the standard of living of the lowest-paid workers and to reduce income inequality. At the same time, this increase has an impact on a number of social and economic aspects, including employers' costs, the level of social benefits, and social security contributions.
**2.**Impact on employers
With the increase in the minimum wage, employers face higher labour costs. This is due not only to the direct increase in the wages of employees who receive the minimum remuneration, but also to the potential need to adjust the wages of other employees in order to maintain the internal hierarchy and motivation. In addition, higher wages lead to increased social security contributions, which are tied to the level of remuneration.
3. Changes in the social security thresholds
One of the substantial changes related to social security contributions in 2025 is the increase in the maximum insurable income. As of 1 April 2025, it rises from BGN 3,750 to BGN 4,130, with a further increase to BGN 4,430 planned as of 1 January 2026.
Ministry of Finance
This means that individuals with higher incomes will owe social security contributions on a larger portion of their income, which will lead to increased personal social security expenses.
4. The social security contribution rates remain unchanged compared to 2024.
Nevertheless, the increase in the maximum insurable income leads to higher absolute amounts of contributions for individuals with incomes above the previous threshold. This is a step towards ensuring greater fairness in the social security system and increasing revenue for the state budget.
5. Impact on tax obligations
The increase in the minimum wage and the maximum insurable income has a direct impact on the tax obligations of individuals. Higher incomes lead to higher tax bases on which income taxes are calculated. However, in 2025 no changes are envisaged in the rates of the main taxes, such as personal income tax and corporate tax.
For employers, the increased labour costs may create a need to optimise expenses and reconsider business strategies. Nevertheless, the government does not plan to increase social security contributions or introduce new taxes, which would ease the additional financial burden on businesses.
6. Social and economic consequences
The increase in the minimum wage is intended to improve the population's purchasing power and to stimulate domestic consumption. Higher incomes can lead to increased demand for goods and services, which in turn can stimulate economic growth. At the same time, there is a risk of rising inflation if the increased demand is not accompanied by adequate supply.
For employers, especially small and medium-sized enterprises, the increased labour costs can pose a challenge. Some companies may need to reconsider their budgets, optimise their workforce, or invest in automation and efficiency improvements in order to offset the increased costs.