HimaHR •

Effective 1 July 2026, Uganda has introduced new PAYE rates for resident individuals. The changes increase the tax-free income threshold and revise some of the existing tax bands.

However, the biggest question for employees is simple: will I take home more money?

What Changed?

The tax‑free threshold has risen from UGX 235,000 to UGX 335,000.
A new 25% band applies between UGX 410,001 and UGX 485,000.
The higher‑income bracket (above UGX 10M) now adds an extra 10% on income above UGX 10M, on top of the existing formula.

Old vs. New PAYE Rates

Monthly Income (UGX)	Old Rates	New Rates
0 – 235,000	Nil	Nil
235,001 – 335,000	10%	Nil
335,001 – 410,000	20%	20%
410,001 – 485,000	30%	15,000 + 25% of income above 410,000
485,001 – 10,000,000	30%	33,750 + 30% of income above 485,000
Above 10,000,000	40%	Same as above + 10% of income above 10,000,000

What This Means for You

Employees earning up to UGX 335,000: No PAYE at all.
Middle‑income earners (UGX 335k–485k): PAYE deductions are lighter thanks to the new band.
High‑income earners (> UGX 485k): A consistent UGX 13,750 reduction in monthly PAYE compared to the old system.

Quick Examples

Monthly Income	Old PAYE	New PAYE	Extra Take‑Home
UGX 335,000	10,000	0	+10,000
UGX 400,000	23,000	13,000	+10,000
UGX 500,000	52,000	38,250	+13,750
UGX 1,000,000	202,000	188,250	+13,750

The figures above compare PAYE only and do not include other deductions or contributions.

Who Benefits Most?

Lower‑income employees: Those earning below UGX 335,000 now keep their full salary.
Middle and higher earners: Everyone above UGX 335,000 enjoys a PAYE cut, with the biggest proportional relief for those just above the threshold. The additional 10% applicable to taxable income above UGX 10 million remains relevant to high-income earners.