Uganda Income Tax (Amendment) Act 2026: Tax-Free Threshold Increase & New Tax Brackets Effective 1 July 2026

Uganda's Income Tax (Amendment) Act, 2026, assented to by the President on 20 August 2026, introduces revised income tax rates and thresholds for resident individuals. The payroll-related amendments are effective from 1 July 2026.

Legislative Summary of Changes

Income Tax-Free Threshold Increase

• The annual tax-free threshold for resident individuals increases from Ushs 2,820,000 to Ushs 4,020,000 (equivalent to Ushs 335,000 per month).
• This represents a 42.6% increase from the previous threshold.

Revised Income Tax Rates for Resident Individuals

The new progressive tax rate structure introduces the following brackets, effective 1 July 2026:

• Income from Ushs 0 to Ushs 4,020,000: 0% (tax-free)
• Income from Ushs 4,020,000 to Ushs 4,920,000: 20%
• Income from Ushs 4,920,000 to Ushs 5,820,000: 25%
• Income from Ushs 5,820,000 to Ushs 120,000,000: 30%
• Income exceeding Ushs 120,000,000: 40%

Important: Monthly Tax-Free Amount

The monthly equivalent of the new tax-free threshold is Ushs 335,000. Employees earning up to this monthly amount are not required to pay income tax.

Official Resources & Release Notes

• Access the official Income Tax (Amendment) Act, 2026 here
• Refer to release note CM-13512, titled Annual amendments / Tax table updates for more information