Beginning January 1, 2026, all pension payments from the Unified Accumulative Pension Fund (UAPF) in Kazakhstan will be exempt from personal income tax (PIT). This major change is part of the new Tax Code signed by the President on July 18, 2025. The exemption applies to both regular pension payments and lump-sum withdrawals for housing or medical treatment. The only exception is for payments made to non-residents of Kazakhstan, DKnews.kz reports.
So, what does this mean in practice? Let’s break it down and see how it will impact retirees, future pensioners, and anyone planning to use their pension savings.
How does it work now?
Under the current Tax Code, pension payments and lump-sum withdrawals (LSW) from the UAPF are treated as taxable income and are subject to a 10% PIT withholding at the source.
Here’s how the system currently works:
- Mandatory, professional, and voluntary pension contributions are transferred to individual accounts before taxes are applied.
- When payouts begin, 10% PIT is withheld from the total amount.
- This rule applies to all types of pension payments, including those used to purchase housing or pay for medical treatment.
With lump-sum withdrawals (LSW), recipients currently have two options:
- Pay the PIT immediately upon receiving the funds;
- Defer payment until they officially retire.
Until January 1, 2026, all tax calculations and withholdings for UAPF payments and LSW will continue under the current rules.
What changes in 2026?
From January 1, 2026, no PIT will be withheld from any kind of pension payment — including lump-sum withdrawals. This exemption applies only to residents of Kazakhstan. Non-residents will still be subject to tax.
Additional changes include:
- The cancellation of previously accrued PIT obligations for deferred taxes on LSW taken before retirement (e.g., for housing or treatment).
- However, any taxes already paid will not be refunded.
What does this mean for you?
- More money in your hands – no more 10% tax deduction, so you receive the full amount of your savings;
- Fairer taxation – your pension savings were accumulated from your income, so now you won’t be taxed a second time when withdrawing them;
- Simplified access to funds – especially for housing or medical needs. No more worrying about when and how to pay the tax — it’s simply gone.
What about voluntary contributions?
Another change coming on January 1, 2026:
Tax deductions for voluntary pension contributions made in your own name will be eliminated. Previously, these could reduce your taxable income. That benefit will no longer apply.
But there's good news:
If your employer contributes to your voluntary pension account on your behalf, then:
- These contributions are not considered your income — and are not subject to PIT;
- The employer can deduct these expenses from their corporate income tax.
So in this case, both the employee and the employer continue to benefit from tax advantages.
Why is this important?
This reform is more than just a tax break. It’s a strategic step toward:
- Encouraging public trust in the pension system;
- Easing the financial burden on retirees and working citizens;
- Making it easier to use savings for real-life needs — like buying a home or paying for treatment.
What should you do now?
Until January 1, 2026, the current rules still apply. If you're considering taking a lump-sum withdrawal, it might be worth waiting a few more months — after that, you won’t owe any tax at all.
If you're an employer, consider offering voluntary pension contributions for your employees. It's a cost-effective way to support your team while enjoying tax benefits.
Starting in 2026, Kazakhstan’s citizens will be able to use their pension savings tax-free. This change will impact millions of people and make the pension system more equitable, efficient, and people-centered.
