How Income Tax Works in Bangladesh (2026)
The Finance Act 2026 (FY 2026-27) changed Bangladesh's salary tax: the tax-free threshold rose to Tk 400,000, the old 5% starter bracket was abolished, and component-wise exemptions were replaced by a single employment exemption of 1/3 of income (max Tk 500,000). There is no mandatory social security deduction for private employees.
The 2026-27 slabs (annual)
| Annual income (BDT) | Rate |
|---|---|
| First 400,000 | 0% |
| Next 300,000 | 10% |
| Next 400,000 | 15% |
| Next 500,000 | 20% |
| Next 20,000,000 | 25% |
| Balance | 30% |
Worked example
Annual salary of Tk 1,200,000: exemption = 1,200,000 ÷ 3 = Tk 400,000. Taxable = 800,000. Tax = 10% × 300,000 + 15% × 100,000 = Tk 45,000/year (≈Tk 3,750/month).
Thresholds & minimum tax
General: Tk 400,000 · Women/seniors 65+: Tk 450,000 · Persons with disability: Tk 525,000 · War-wounded freedom fighters: Tk 550,000. A Tk 5,000 minimum tax applies to anyone above the threshold.
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Another worked example
Annual salary of Tk 1,500,000 (general taxpayer): exempt = min(500,000, 500,000) = Tk 500,000. Taxable = 1,000,000. Tax = 10% × 300,000 + 15% × 300,000 = Tk 75,000. Monthly take-home = (1,500,000 − 75,000) ÷ 12 ≈ Tk 118,750.
Reading your Bangladeshi payslip
Bangladesh's payslip is simple: gross salary and TDS (tax deducted at source) — your employer withholds monthly against the annual computation. The one-third exemption (max Tk 500,000) is applied in the annual math, not as a payslip line. At year-end, your employer issues a salary certificate — keep it; it's the first document the NBR asks for with your return. If your computed tax is below Tk 5,000, the minimum-tax rule still makes you owe Tk 5,000 for the year.
Common mistakes
1. The old component-wise exemptions. Replaced by the single one-third rule (Tk 500,000 cap).
2. The old 5% starter bracket. Abolished — the first taxable band is now 10%.
3. Forgetting the Tk 5,000 minimum tax. Low computed tax doesn't mean zero tax.
What counts as taxable income in Bangladesh
Bangladesh taxes basic salary plus all allowances and perquisites — the old component-wise exemptions are gone, replaced by the single one-third exemption (max Tk 500,000). Bonuses (including the two Eid festival bonuses), overtime, and benefits are all in the total. Exempt: genuine reimbursements. Provident fund: the employer's contribution and the interest have their own exempt limits — check the current NBR circulars, as these change more often than the slabs.
Tax year and filing in Bangladesh
Bangladesh's income year runs 1 July to 30 June, with the assessment year starting the following 1 July — these figures apply to income year 2026-27. Monthly TDS from salary is adjusted in the annual return, which individuals generally file by 30 November. E-filing through the NBR portal is now standard. Your employer's salary certificate is the key document — reconcile it against your 12 months of payslips before filing.
Sources & verification
Figures compiled from: National Board of Revenue (NBR).
Last verified: 23 October 2026. This guide is an estimate, not tax advice.