Compared to other countries, following the World Bank analyses, Latvia compared to other countries of the European Union before 2018 tax reforms had relatively high labour taxes but very low capital taxes. It is important that tax reform from 2018 has given some impact on tax burden for all tax payers, including employers. Reducing tax burden can make impact on consumption of goods and services, employer’s competitiveness. The aim of the research is to study the changes in personal income tax since 2018 and their impact on earned income. The author studied the impact of changes in personal income tax on labor income in different categories and developed proposals on how to improve personal income tax in order to increase the net labor income of employees.