In this paper employment income is presented as a type of income that derives from an employment contract between an individual employee and an employer. It is regulated by the Income Tax Law. Based on the employment contract, the employee is entitled to be paid for the work he or she does and to all other contractual and statutory rights stated in their contracts. It can be seen that employment income is defined as a difference between cash or in-kind income and expenditure (contributions for compulsory insurance) within the same tax period. Moreover, it is explained how to calculate tax and surtax in relation to personal deductions. Personal deduction represents a reduced part of the tax base, but it could be increased depending on the use of certain rights that are filled out in the tax form. This paper brings an overview of implementing employment income as of 1 January 2020. Furthermore, it defines the annual salary statement as a way of verifying the accuracy of the amount of tax and surtax advance payments for all employees who have been receiving taxable income during the year, and depending on overpayment or underpayment he or she is entitled to a tax refund or has to pay the amount he or she owes. All employers are obliged to submit an annual income statement during December, by 31 December of a current year at the latest.