How Salary Deductions Work in Saudi Arabia (2026)
Saudi Arabia levies no personal income tax — on anyone. But "no income tax" doesn't mean "no deductions," and it definitely doesn't mean your final settlement is just your last salary. Here's what actually comes off a Saudi paycheck, and the big payout most expats underestimate.
GOSI — who pays, who doesn't
The General Organization for Social Insurance (GOSI) applies to Saudi nationals only. Two systems run in parallel:
| Registered | Employee rate |
|---|---|
| Before 3 July 2024 (legacy) | 9.75% |
| From 3 July 2024 (new system) | 10.75% (Jul 2026–Jun 2027) |
The base is basic salary + housing allowance, capped at SAR 45,000/month. The new-system rate rises to 11.75% by July 2028 (it includes 0.75% SANED unemployment insurance). Expatriates pay 0% — net equals gross.
Zakat is not a payroll deduction
Saudi Arabia's 2.5% zakat applies to wealth and business assets, not to monthly salary. Your employer does not deduct it from your paycheck.
End-of-service gratuity — your biggest payout
Under Articles 84–85 of the Labor Law: half a month's wage for each of the first 5 years, plus one full month's wage for each year after — computed on your last wage including fixed allowances (not basic alone). Resignation scales it down: nothing under 2 years, one-third for 2–5 years, two-thirds for 5–10 years, full at 10+.
Worked examples
Example 1 — Saudi national, SAR 20,000/month (basic 14,000 + housing 6,000): GOSI = 10.75% × 20,000 = SAR 2,150. Take-home = SAR 17,850. No income tax.
Example 2 — expat gratuity, 7 years, wage SAR 20,000, resigned: full award = 0.5 × 20,000 × 5 + 1 × 20,000 × 2 = SAR 90,000. Resignation at 7 years → two-thirds = SAR 60,000.
Basic vs. housing vs. transport — why the split matters
Saudi contracts typically split pay into basic (60–70%), housing (25–30%) and transport (~10%). The split matters because GOSI is charged on basic + housing, and gratuity on the full last wage including fixed allowances. A "SAR 20,000 package" with a SAR 12,000 basic gives a smaller GOSI bill — but also a smaller gratuity base — than the same package with a SAR 15,000 basic. Always check which number your contract calls "basic."
Sending money home
With no income tax, expats typically remit a large share of pay. Compare the total received across banks, transfer apps and exchange houses — a 2% better rate on SAR 8,000/month is worth over SAR 2,000 a year. Try our salary currency converter for the live mid-market rate before you send.
Common mistakes
1. Expats assuming GOSI applies to them. It doesn't — if your payslip shows a GOSI deduction and you're an expat, query it.
2. Gratuity calculated on basic salary only. The law says "wage" — include your fixed housing and transport allowances.
3. Resigning at 1 year 11 months. One more month takes you over the 2-year line and unlocks one-third of your gratuity.
Try it: Saudi Arabia salary calculator →
Saudi Arabia — frequently asked questions
Is there income tax on salary in Saudi Arabia?
No. Saudi Arabia levies no personal income tax on salaries — Saudi nationals and expatriates alike keep 100% of gross pay before social insurance.
How much is GOSI deduction in Saudi Arabia?
Saudi nationals: 10.75% of basic salary plus housing allowance (capped at SAR 45,000/month) under the new system from July 2026; 9.75% if registered before 3 July 2024. Expatriates pay 0%.
How is end-of-service gratuity calculated in Saudi Arabia?
Half a month's wage for each of the first 5 years plus one full month's wage per year after, based on the last wage including fixed allowances. Resignation reduces it: nothing under 2 years, one-third for 2–5 years, two-thirds for 5–10 years, full at 10+ years.
Do expatriates pay GOSI in Saudi Arabia?
No. GOSI employee contributions apply to Saudi nationals only. If you're an expat and see a GOSI deduction on your payslip, raise it with HR — it's likely an error.
What is SANED unemployment insurance?
SANED is the unemployment insurance component inside GOSI — 0.75% of the new-system employee rate (the employer pays 1%). It pays benefits to Saudi nationals who lose their jobs involuntarily.
Sources & verification
Figures compiled from: GOSI · MHRSD — Labor Law (Royal Decree M/51).
Last verified: 23 October 2026. Estimate only — not tax advice.