Uganda's new PAYE rates from July 2026: what changes for your salary
From July 2026 the first UGX 335,000 of monthly pay is tax-free and the PAYE bands have been reset. Most employees now pay less. Here is how the new rates work.
Uganda's Income Tax (Amendment) Act 2026 changed how salaries are taxed from 1 July 2026. The President assented to it on 20 August 2026, so many employers applied the new PAYE rates with a back-dated adjustment. If your payslip changed in August or September, this is why. This guide explains Uganda's new PAYE rates for 2026, how much less tax you pay, how NSSF fits in, and how to check your own take-home pay.
Uganda's new monthly PAYE bands
For resident employees, the first UGX 335,000 of monthly income is now tax-free. Pay between UGX 335,000 and UGX 410,000 is taxed at 20% of the amount above 335,000. Pay between UGX 410,000 and UGX 485,000 is taxed at UGX 15,000 plus 25% of the amount above 410,000. Above UGX 485,000, PAYE is UGX 33,750 plus 30% of the amount above 485,000. People earning more than UGX 10,000,000 a month pay an extra 10% on the amount above 10 million.
The yearly equivalent of the tax-free amount is UGX 4,020,000. Non-resident employees are taxed under different rates, so these figures apply only to residents.
How much less PAYE you pay
The biggest change is the higher tax-free threshold. Anyone earning more than UGX 485,000 a month pays UGX 13,750 less PAYE every month than under the old rates, which adds up to UGX 165,000 a year. For example, PAYE on a salary of UGX 500,000 fell from UGX 52,000 to UGX 38,250. Lower earners gain proportionally more: on UGX 350,000, PAYE fell from UGX 13,000 to just UGX 3,000. Workers earning UGX 335,000 or less now pay no PAYE at all.
NSSF contributions in Uganda
Employees pay 5% of gross pay to the National Social Security Fund, and employers add 10%, so 15% of your salary goes into your NSSF savings every month. In Uganda, PAYE is worked out on your gross pay, so the NSSF contribution does not reduce your tax. Your NSSF savings earn interest each year, which the Fund declares after its annual results; read our guide to the NSSF Uganda interest rate for the latest figure.
Worked examples under the new PAYE rates
Salary of UGX 500,000 a month. NSSF is UGX 25,000 and PAYE is UGX 38,250, leaving take-home pay of UGX 436,750.
Salary of UGX 1,000,000 a month. NSSF is UGX 50,000 and PAYE is UGX 188,250 (UGX 33,750 plus 30% of UGX 515,000), leaving take-home pay of UGX 761,750.
Salary of UGX 3,000,000 a month. NSSF is UGX 150,000 and PAYE is UGX 788,250, leaving take-home pay of UGX 2,061,750.
Work out your own pay in seconds with our Uganda PAYE calculator, which uses the 2026 bands.
What the PAYE figures do not include
Local Service Tax is charged by local governments according to your income and is deducted separately by employers, usually in instalments over the first four months of the financial year. You may therefore see a slightly lower net salary between July and October. Benefits provided by your employer, such as a car or housing, are valued and added to your taxable pay, which raises PAYE. Loan repayments, SACCO savings and other voluntary deductions also come off your pay but are not taxes.
What to do if your payslip looks wrong
Because the law was passed after the start of the financial year, employers had to refund any PAYE overcharged in July and August. If your employer did not adjust your pay, ask the payroll team to show how the back-dated change was applied. Keep your payslips, as they are your record of tax paid if you ever need to deal with the Uganda Revenue Authority directly.
Frequently asked questions
What is the tax-free income in Uganda in 2026?
UGX 335,000 a month, or UGX 4,020,000 a year, for resident employees.
Does NSSF reduce PAYE in Uganda?
No. PAYE is calculated on gross pay, so NSSF contributions do not lower your tax.
When did the new PAYE rates start?
They apply from 1 July 2026, the start of Uganda's financial year, though the Act was signed on 20 August 2026.
Sources
This article is general information, not financial advice.