diff --git a/app/Enums/BudgetPeriodType.php b/app/Enums/BudgetPeriodType.php
index 1765d0de..834d5922 100644
--- a/app/Enums/BudgetPeriodType.php
+++ b/app/Enums/BudgetPeriodType.php
@@ -7,6 +7,7 @@ enum BudgetPeriodType: string
     case Monthly = 'monthly';
     case Weekly = 'weekly';
     case Biweekly = 'biweekly';
+    case Yearly = 'yearly';
 
     public function label(): string
     {
@@ -14,6 +15,7 @@ enum BudgetPeriodType: string
             self::Monthly => 'Monthly',
             self::Weekly => 'Weekly',
             self::Biweekly => 'Bi-weekly',
+            self::Yearly => 'Yearly',
         };
     }
 }
diff --git a/app/Services/BudgetPeriodService.php b/app/Services/BudgetPeriodService.php
index 76628776..7b7a2bb1 100644
--- a/app/Services/BudgetPeriodService.php
+++ b/app/Services/BudgetPeriodService.php
@@ -80,6 +80,10 @@ class BudgetPeriodService
                 $endDate = $startDate->copy()->addWeeks(2)->subDay();
                 break;
 
+            case BudgetPeriodType::Yearly:
+                $startDate->startOfYear();
+                $endDate = $startDate->copy()->addYear()->subDay();
+                break;
         }
 
         return [$startDate, $endDate];
diff --git a/database/factories/BudgetFactory.php b/database/factories/BudgetFactory.php
index 51552e19..2707e200 100644
--- a/database/factories/BudgetFactory.php
+++ b/database/factories/BudgetFactory.php
@@ -42,4 +42,12 @@ class BudgetFactory extends Factory
             'period_start_day' => fake()->numberBetween(0, 6),
         ]);
     }
+
+    public function yearly(): static
+    {
+        return $this->state(fn (array $attributes) => [
+            'period_type' => BudgetPeriodType::Yearly,
+            'period_start_day' => 1,
+        ]);
+    }
 }
diff --git a/resources/js/components/budgets/create-budget-dialog.tsx b/resources/js/components/budgets/create-budget-dialog.tsx
index 546c561b..3b6a1065 100644
--- a/resources/js/components/budgets/create-budget-dialog.tsx
+++ b/resources/js/components/budgets/create-budget-dialog.tsx
@@ -88,7 +88,7 @@ export function CreateBudgetDialog({
             {
                 name,
                 period_type: periodType,
-                period_start_day: periodStartDay,
+                period_start_day: periodType === 'yearly' ? 1 : periodStartDay,
                 category_id: selectedCategoryId || null,
                 label_id: selectedLabelId || null,
                 rollover_type: rolloverType,
@@ -164,9 +164,10 @@ export function CreateBudgetDialog({
                             </UILabel>
                             <Select
                                 value={periodType}
-                                onValueChange={(value) =>
-                                    setPeriodType(value as BudgetPeriodType)
-                                }
+                                onValueChange={(value) => {
+                                    setPeriodType(value as BudgetPeriodType);
+                                    setPeriodStartDay(1);
+                                }}
                             >
                                 <SelectTrigger id="period-type">
                                     <SelectValue />
@@ -181,34 +182,37 @@ export function CreateBudgetDialog({
                             </Select>
                         </div>
 
-                        <div className="space-y-2">
-                            <UILabel htmlFor="period-start-day">
-                                {periodType === 'monthly'
-                                    ? __('Start Day of Month')
-                                    : __('Start Day')}
-                            </UILabel>
-                            <Input
-                                id="period-start-day"
-                                type="number"
-                                min="0"
-                                max={periodType === 'monthly' ? '31' : '6'}
-                                value={periodStartDay}
-                                onChange={(e) =>
-                                    setPeriodStartDay(parseInt(e.target.value))
-                                }
-                            />
+                        {periodType !== 'yearly' && (
+                            <div className="space-y-2">
+                                <UILabel htmlFor="period-start-day">
+                                    {periodType === 'monthly'
+                                        ? __('Start Day of Month')
+                                        : __('Start Day')}
+                                </UILabel>
+                                <Input
+                                    id="period-start-day"
+                                    type="number"
+                                    min="0"
+                                    max={periodType === 'monthly' ? '31' : '6'}
+                                    value={periodStartDay}
+                                    onChange={(e) =>
+                                        setPeriodStartDay(
+                                            parseInt(e.target.value),
+                                        )
+                                    }
+                                />
 
-                            <p className="text-sm text-muted-foreground">
-                                {periodType === 'monthly'
-                                    ? __(
-                                          'Day of the month when the period starts (1-31)',
-                                      )
-                                    : periodType === 'weekly' ||
-                                        periodType === 'biweekly'
-                                      ? __('Day of week (0=Sunday, 6=Saturday)')
-                                      : __('Starting day')}
-                            </p>
-                        </div>
+                                <p className="text-sm text-muted-foreground">
+                                    {periodType === 'monthly'
+                                        ? __(
+                                              'Day of the month when the period starts (1-31)',
+                                          )
+                                        : __(
+                                              'Day of week (0=Sunday, 6=Saturday)',
+                                          )}
+                                </p>
+                            </div>
+                        )}
 
                         <div className="space-y-4">
                             {errors.selection && (
@@ -308,7 +312,9 @@ export function CreateBudgetDialog({
                                     )}
                                 </div>
                                 <p className="text-sm text-muted-foreground">
-                                    {__('Select at least a category or a label to track.')}
+                                    {__(
+                                        'Select at least a category or a label to track.',
+                                    )}
                                 </p>
                             </div>
 
diff --git a/resources/js/components/budgets/edit-budget-dialog.tsx b/resources/js/components/budgets/edit-budget-dialog.tsx
index 053eafa1..cd8472c5 100644
--- a/resources/js/components/budgets/edit-budget-dialog.tsx
+++ b/resources/js/components/budgets/edit-budget-dialog.tsx
@@ -80,7 +80,7 @@ export function EditBudgetDialog({
             {
                 name,
                 period_type: periodType,
-                period_start_day: periodStartDay,
+                period_start_day: periodType === 'yearly' ? 1 : periodStartDay,
                 allocated_amount: allocatedAmount,
                 rollover_type: rolloverType,
             },
@@ -127,9 +127,12 @@ export function EditBudgetDialog({
                                 <Select
                                     value={periodType}
                                     disabled
-                                    onValueChange={(value) =>
-                                        setPeriodType(value as BudgetPeriodType)
-                                    }
+                                    onValueChange={(value) => {
+                                        setPeriodType(
+                                            value as BudgetPeriodType,
+                                        );
+                                        setPeriodStartDay(1);
+                                    }}
                                 >
                                     <SelectTrigger id="period-type">
                                         <SelectValue />
@@ -145,36 +148,39 @@ export function EditBudgetDialog({
                             </div>
                         </div>
 
-                        <div className="space-y-2">
-                            <Label htmlFor="period-start-day">
-                                {periodType === 'monthly'
-                                    ? __('Start Day of Month')
-                                    : __('Start Day')}
-                            </Label>
-                            <Input
-                                id="period-start-day"
-                                disabled
-                                type="number"
-                                className="mt-1"
-                                min="0"
-                                max={periodType === 'monthly' ? '31' : '6'}
-                                value={periodStartDay}
-                                onChange={(e) =>
-                                    setPeriodStartDay(parseInt(e.target.value))
-                                }
-                            />
+                        {periodType !== 'yearly' && (
+                            <div className="space-y-2">
+                                <Label htmlFor="period-start-day">
+                                    {periodType === 'monthly'
+                                        ? __('Start Day of Month')
+                                        : __('Start Day')}
+                                </Label>
+                                <Input
+                                    id="period-start-day"
+                                    disabled
+                                    type="number"
+                                    className="mt-1"
+                                    min="0"
+                                    max={periodType === 'monthly' ? '31' : '6'}
+                                    value={periodStartDay}
+                                    onChange={(e) =>
+                                        setPeriodStartDay(
+                                            parseInt(e.target.value),
+                                        )
+                                    }
+                                />
 
-                            <p className="text-sm text-muted-foreground">
-                                {periodType === 'monthly'
-                                    ? __(
-                                          'Day of the month when the period starts (1-31)',
-                                      )
-                                    : periodType === 'weekly' ||
-                                        periodType === 'biweekly'
-                                      ? __('Day of week (0=Sunday, 6=Saturday)')
-                                      : __('Starting day')}
-                            </p>
-                        </div>
+                                <p className="text-sm text-muted-foreground">
+                                    {periodType === 'monthly'
+                                        ? __(
+                                              'Day of the month when the period starts (1-31)',
+                                          )
+                                        : __(
+                                              'Day of week (0=Sunday, 6=Saturday)',
+                                          )}
+                                </p>
+                            </div>
+                        )}
 
                         <div className="space-y-2">
                             <Label htmlFor="allocated-amount">
diff --git a/resources/js/types/budget.ts b/resources/js/types/budget.ts
index 71cc335a..e0f456c5 100644
--- a/resources/js/types/budget.ts
+++ b/resources/js/types/budget.ts
@@ -4,7 +4,12 @@ import { Label } from './label';
 import { Transaction } from './transaction';
 import { UUID } from './uuid';
 
-export const BUDGET_PERIOD_TYPES = ['monthly', 'weekly', 'biweekly'] as const;
+export const BUDGET_PERIOD_TYPES = [
+    'monthly',
+    'weekly',
+    'biweekly',
+    'yearly',
+] as const;
 
 export type BudgetPeriodType = (typeof BUDGET_PERIOD_TYPES)[number];
 
@@ -64,6 +69,7 @@ export function getBudgetPeriodTypeLabel(type: BudgetPeriodType): string {
         monthly: __('Monthly'),
         weekly: __('Weekly'),
         biweekly: __('Bi-weekly'),
+        yearly: __('Yearly'),
     };
     return labels[type];
 }
diff --git a/tests/Feature/BudgetPeriodServiceTest.php b/tests/Feature/BudgetPeriodServiceTest.php
index 361f8d69..7435507f 100644
--- a/tests/Feature/BudgetPeriodServiceTest.php
+++ b/tests/Feature/BudgetPeriodServiceTest.php
@@ -57,6 +57,29 @@ test('generatePeriod advances weekly periods to next week', function () {
     expect($next->end_date->toDateString())->toBe('2026-05-17');
 });
 
+test('generatePeriod advances yearly periods to next year', function () {
+    Carbon::setTestNow(Carbon::parse('2026-06-02 09:00:00'));
+
+    $user = User::factory()->create(['onboarded_at' => now()]);
+    $budget = Budget::factory()->create([
+        'user_id' => $user->id,
+        'period_type' => BudgetPeriodType::Yearly,
+        'period_start_day' => 1,
+    ]);
+
+    BudgetPeriod::factory()->create([
+        'budget_id' => $budget->id,
+        'start_date' => '2025-01-01',
+        'end_date' => '2025-12-31',
+        'allocated_amount' => 10000,
+    ]);
+
+    $next = app(BudgetPeriodService::class)->generatePeriod($budget);
+
+    expect($next->start_date->toDateString())->toBe('2026-01-01');
+    expect($next->end_date->toDateString())->toBe('2026-12-31');
+});
+
 test('generatePeriod uses period_start_day snap when no prior periods exist', function () {
     Carbon::setTestNow(Carbon::parse('2026-05-15 09:00:00'));
 
@@ -72,3 +95,19 @@ test('generatePeriod uses period_start_day snap when no prior periods exist', fu
     expect($period->start_date->toDateString())->toBe('2026-05-01');
     expect($period->end_date->toDateString())->toBe('2026-05-31');
 });
+
+test('generatePeriod creates current calendar year when yearly budget has no prior periods', function () {
+    Carbon::setTestNow(Carbon::parse('2026-05-15 09:00:00'));
+
+    $user = User::factory()->create(['onboarded_at' => now()]);
+    $budget = Budget::factory()->create([
+        'user_id' => $user->id,
+        'period_type' => BudgetPeriodType::Yearly,
+        'period_start_day' => 1,
+    ]);
+
+    $period = app(BudgetPeriodService::class)->generatePeriod($budget);
+
+    expect($period->start_date->toDateString())->toBe('2026-01-01');
+    expect($period->end_date->toDateString())->toBe('2026-12-31');
+});
diff --git a/tests/Feature/BudgetTest.php b/tests/Feature/BudgetTest.php
index 26d32e0b..9ef6dae9 100644
--- a/tests/Feature/BudgetTest.php
+++ b/tests/Feature/BudgetTest.php
@@ -32,6 +32,30 @@ test('user can create a budget', function () {
     $this->assertCount(1, $budget->periods);
 });
 
+test('user can create a yearly budget', function () {
+    $user = User::factory()->create(['onboarded_at' => now()]);
+
+    $category = Category::factory()->create(['user_id' => $user->id]);
+
+    $response = $this->actingAs($user)->post('/budgets', [
+        'name' => 'Yearly Budget',
+        'period_type' => 'yearly',
+        'period_start_day' => 1,
+        'category_id' => $category->id,
+        'rollover_type' => 'reset',
+        'allocated_amount' => 1200000,
+    ]);
+
+    $response->assertRedirect();
+
+    $budget = Budget::where('user_id', $user->id)->where('period_type', 'yearly')->first();
+
+    expect($budget)->not->toBeNull()
+        ->and($budget->periods()->count())->toBe(1)
+        ->and($budget->periods()->first()->start_date->toDateString())->toBe(now()->startOfYear()->toDateString())
+        ->and($budget->periods()->first()->end_date->toDateString())->toBe(now()->endOfYear()->toDateString());
+});
+
 test('user can view their budgets', function () {
     $user = User::factory()->create(['onboarded_at' => now()]);