Business 27 April 2026 Daily Monitor (Uganda)

New PAYE Reforms Offer Tax Relief but Highlight Uganda's Low Wage Crisis

Uganda's proposed PAYE changes raise the tax-free threshold to Shs335,000, providing modest relief for low earners, but underscore the harsh reality that many formal sector salaries remain insufficient for basic living expenses in 2026. While the updates modernize an outdated system, they fail to address the root issue of stagnant wages amid rising costs. Source: https://www.monitor.co.ug/uganda/business/prosper/how-new-paye-will-change-your-salary-5438724

Uganda’s government has proposed significant updates to the Pay As You Earn (PAYE) tax system, the first major revision in over a decade. This comes as living costs like fuel, rent, and school fees have soared since the last adjustments around 2012.

The new brackets include:

0% on income up to Shs335,000
20% from Shs335,001 to Shs410,000
25% from Shs410,001 to Shs485,000
30% from Shs485,001 to Shs10,000,000
40% above Shs10,000,000

Compared to the previous threshold of Shs235,000, this offers breathing room for many workers. For instance, someone earning Shs350,000 will see reduced deductions, potentially covering small essentials like transport or meals.

Yet, the reforms reveal deeper economic woes. Many formal employees still earn around Shs350,000 monthly, a figure that barely sustains daily needs—leaving little for emergencies or family support. This isn’t just a tax matter; it’s a signal of low productivity, wage stagnation, and an economy where full-time work doesn’t ensure dignity.

While the changes are progressive in easing the tax burden on the poor, they frustrate by normalizing survival-level incomes. Tax tweaks provide temporary relief, but without wage growth matching inflation, workers remain trapped in a cycle of financial strain.

Uganda’s PAYE top rate of 40% is the region’s highest, outpacing Kenya’s 35% and neighbors at 30%. True progress demands tackling low salaries alongside tax fairness.

Source: Daily Monitor (Uganda)