In this paper an overview of tax benefits granted by Estonian legal acts is given, and
extent of tax benefits use by resident natural persons using the data from databases
of Estonian Tax and Customs Board (ETCB) is analyzed. Also the possibility of tax
benefits classification is considered and to whom and on which purposes stated tax
benefits are addressed is analyzed. Research based on three years data shows that in
Estonia tax benefits for individuals are widely used. On average uncollected
amounts of tax due to tax benefits approximately equal 9% of the state budget
revenues. Large amount of tax benefits is not a negative indicator per se but they aid
distributed incomes to reach people who really need those benefits. In opposite case
tax benefits are not reasoned but they rather create additional administrative
workload. Talking about Estonian tax system roughly half of tax benefits is
addresses to people who belong to low income stratum, at the same time remarkable
proportion of benefits may be directed to middle-class and wealthy people.