How Income Tax Works in Uganda (2026)
Uganda withholds PAYE from salaries monthly. From 1 July 2026, new bands apply: the tax-free threshold rose from UGX 235,000 to UGX 335,000. Unlike Tanzania, Uganda taxes your full gross — NSSF does not reduce taxable income.
The 2026 PAYE bands (monthly, from 1 July 2026)
| Monthly chargeable income (UGX) | Rate |
|---|---|
| 0 – 335,000 | 0% |
| 335,001 – 410,000 | 20% |
| 410,001 – 485,000 | 25% |
| 485,001 – 10,000,000 | 30% |
| Above 10,000,000 | 40% (30% + 10% surcharge) |
Worked example
Monthly salary of UGX 2,000,000: PAYE = 33,750 + 30% × (2,000,000 − 485,000) = UGX 488,250. NSSF = 5% × 2,000,000 = UGX 100,000. Take-home = 2,000,000 − 488,250 − 100,000 = UGX 1,411,750.
NSSF
Employees contribute 5% of gross salary (employer 10%) to the National Social Security Fund — deducted after PAYE, not before.
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Another worked example
Monthly salary of UGX 2,000,000: PAYE (on full gross) = 33,750 + 30% × 1,515,000 = UGX 488,250. NSSF = 5% × 2,000,000 = UGX 100,000. Take-home = 2,000,000 − 488,250 − 100,000 = UGX 1,411,750.
Reading your Ugandan payslip
Your payslip shows gross salary, PAYE (computed on the full gross — unlike Tanzania), and NSSF 5% deducted afterwards. The employer's 10% NSSF never touches your payslip. Once a year you may also see a small Local Service Tax line (UGX 5,000–100,000 depending on income). If your PAYE uses bands starting at 235,000 instead of 335,000, your payroll is on the old pre-July-2026 table.
Common mistakes
1. Old pre-July-2026 bands. The tax-free threshold is now UGX 335,000, not 235,000.
2. Subtracting NSSF before PAYE. Uganda taxes the full gross; NSSF comes after.
3. Forgetting Local Service Tax. Small but real — UGX 5,000 to 100,000/year.
What counts as taxable income in Uganda
URA's definition of employment income is broad: basic salary, allowances (housing, transport, medical), bonuses, overtime, commissions, and the market value of benefits in kind (car, housing, school fees paid by employer). Exempt: genuine business-expense reimbursements and employer NSSF contributions. The 30% rule: benefits are generally taxed at the higher of cost to employer or market value — so a "free" company car is very much taxable.
Tax year and filing in Uganda
Uganda's tax year runs 1 July to 30 June — so these 2026 bands apply from 1 July 2026 to 30 June 2027. Most employees never file: PAYE is a final withholding, and your employer handles it monthly. You generally only file a return if you have other income (rental, business) on top of your salary. Keep your annual PAYE records anyway — URA can ask for them up to several years back.
Sources & verification
Figures compiled from: Uganda Revenue Authority (URA) · NSSF Uganda.
Last verified: 23 October 2026. This guide is an estimate, not tax advice.