Business 20 April 2026 Daily Monitor (Uganda)
Upcoming PAYE Tax Reforms to Boost Take-Home Pay for Ugandans
Uganda's proposed Pay As You Earn (PAYE) changes will raise the tax-free threshold to Shs335,000 monthly and introduce a 25% band for incomes between Shs410,000 and Shs485,000, offering relief to low- and middle-income earners. Despite this, Uganda's tax rates remain higher and start earlier than in neighboring countries. Source: https://www.monitor.co.ug/uganda/business/prosper/how-pay-as-you-earn-changes-will-impact-you-5429728
Uganda is set to revise its Pay As You Earn (PAYE) system as part of the annual budget process, where the Finance Minister presents proposals to Parliament by April 1.
Currently, the tax-free threshold stands at Shs235,000 per month. The first band taxes 10% on earnings from Shs235,001 to Shs335,000, 20% from Shs335,001 to Shs410,000, 30% above Shs410,000, and 40% for those exceeding Shs10 million monthly.
The key proposals include lifting the tax-free threshold to Shs335,000, meaning earners up to this level pay no PAYE. A new 25% band will apply to incomes between Shs410,000 and Shs485,000, reducing the tax burden from the current 30% for middle-income groups.
These adjustments, last updated in 2012, aim to address inflation and rising living costs, providing more disposable income to boost consumption and ease poverty.
However, Uganda’s 40% top rate kicks in earlier than regional peers: Kenya at 35% from Shs22 million, Tanzania and Rwanda at 30% from much higher thresholds. This leaves Ugandans with less take-home pay compared to neighbors.
Experts note the changes prioritize equity but call for stronger public services to justify taxes and support economic growth.
Source: Daily Monitor (Uganda)