From 1 July 2026 the first UGX 335,000 is tax-free. See how much you save and whether you are owed a PAYE refund for July and August.
Uganda’s new PAYE rates for 2026 mean most salaried workers now take home more money every month. From 1 July 2026, the first UGX 335,000 of your monthly salary is tax-free, up from UGX 235,000, and a new 25% band softens the jump to 30%.
There is a catch many employees have missed. The law that introduced these rates was only signed on 20 August 2026, but it applies from 1 July. That means many employers deducted PAYE for July and August at the old rates, and some of you paid too much tax.
The Uganda Revenue Authority (URA) has told employers to correct those returns and refund the overpaid tax to staff. In this guide you will see the new PAYE bands, how much you save at different salary levels, whether you are owed a refund, and exactly how to check your payslip and ask HR for it.
How we checked these figures: every band and example below comes from URA’s published PAYE rates and its 7 September 2026 public notice. We calculated each example with the same formula used in our free Uganda PAYE and net pay calculator, and the results match URA’s own worked example.
Table of Contents
What Changed in Uganda’s PAYE for 2026?
Quick answer: Under the Income Tax (Amendment) Act 2026, the monthly tax-free threshold rose from UGX 235,000 to UGX 335,000, the old 10% band was removed, and a new 25% band was added for income between UGX 410,001 and 485,000. The changes apply to resident employees from 1 July 2026.
According to URA’s summary of the FY 2026/27 tax amendments, the annual tax-free threshold increased from UGX 2,820,000 to UGX 4,020,000. That works out to UGX 335,000 per month.
The government’s stated reason is to reduce the tax burden on low-income earners. The old threshold had been in place since 2012 and had not been adjusted for rising living costs.
The timing caused confusion. A tax alert from Kampala Associated Advocates explains that the President assented to the Act on 20 August 2026, but its commencement date is 1 July 2026. Payroll for July and August therefore had to be recalculated.
New PAYE Rates in Uganda 2026 (Monthly Bands)
These are the monthly rates for resident individuals, as published on URA’s PAYE rates page:
| Monthly chargeable income (UGX) | PAYE |
|---|---|
| 0 to 335,000 | Nil |
| 335,001 to 410,000 | 20% of the amount above 335,000 |
| 410,001 to 485,000 | 15,000 + 25% of the amount above 410,000 |
| 485,001 to 10,000,000 | 33,750 + 30% of the amount above 485,000 |
| Above 10,000,000 | 33,750 + 30% of the amount above 485,000, plus 10% of the amount above 10,000,000 |
For comparison, the old rates started taxing income above UGX 235,000 at 10%, then moved to 20% above UGX 335,000 and 30% above UGX 410,000. The new structure delays each step, so every taxpayer above the threshold pays less tax.
Remember: PAYE works like a ladder. A person earning UGX 12 million does not pay 40% on all of it. The extra 10% applies only to the portion above UGX 10 million, and each lower band is taxed at its own rate.
How Much Less PAYE Will You Pay?
If you earn UGX 485,000 or more a month, you now pay UGX 13,750 less PAYE every month. That is UGX 165,000 a year. Workers earning between UGX 235,000 and 485,000 save smaller amounts, but some move out of the tax net completely.
| Monthly gross salary (UGX) | PAYE: old rates | PAYE: new rates | Monthly saving |
|---|---|---|---|
| 300,000 | 6,500 | 0 | 6,500 |
| 335,000 | 10,000 | 0 | 10,000 |
| 400,000 | 23,000 | 13,000 | 10,000 |
| 450,000 | 37,000 | 25,000 | 12,000 |
| 500,000 | 52,000 | 38,250 | 13,750 |
| 1,000,000 | 202,000 | 188,250 | 13,750 |
| 2,000,000 | 502,000 | 488,250 | 13,750 |
| 5,000,000 | 1,402,000 | 1,388,250 | 13,750 |
The UGX 500,000 row matches the illustration in URA’s 7 September 2026 notice, where PAYE falls from UGX 52,000 to UGX 38,250.
The biggest relief, compared with what people were paying, goes to lower earners. Someone on UGX 300,000 or 335,000 a month now pays no income tax at all.
Want your exact figure? Enter your gross salary and see your new PAYE, NSSF and take-home pay in seconds.
Use the Free PAYE CalculatorAre You Owed a PAYE Refund for July and August 2026?
You may be owed a refund if your employer deducted PAYE for July or August 2026 using the old rates. If you earn UGX 485,000 or more, the overpayment is UGX 13,750 per month, so up to UGX 27,500 for both months.
URA’s notice spells out what employers must do:
- Where the July or August PAYE return was filed using the old rates, the employer should amend the affected returns.
- Any credit that arises can be used against the employer’s later PAYE returns.
- Employers are obliged to refund the overpaid tax to affected employees, which may be done through an adjustment in a later payroll.
In practice, this means the refund usually comes from your employer through your salary, not from URA directly to you.
| Monthly gross salary (UGX) | Overpaid per month | Possible refund (July + August) |
|---|---|---|
| 300,000 | 6,500 | 13,000 |
| 400,000 | 10,000 | 20,000 |
| 450,000 | 12,000 | 24,000 |
| 485,000 and above | 13,750 | 27,500 |
You are probably not owed anything if: you earned UGX 235,000 or less (you paid no PAYE under either system), or your employer already applied the new rates from July.
Worked example: a bank teller on UGX 1.2 million
Take an example teller earning UGX 1,200,000 a month. At the old rates, her July tax would have been UGX 262,000. At the new rates it is UGX 248,250. If payroll used the old rates in July and August, she overpaid UGX 13,750 each month, so UGX 27,500 in total.
Once her employer amends the returns, that UGX 27,500 should come back to her as an adjustment on a later payslip. Her take-home pay going forward is UGX 891,750 before Local Service Tax (gross minus UGX 248,250 tax and UGX 60,000 NSSF).
How To Check Your Payslip in 5 Minutes
- Find your July and August 2026 payslips. Look for the income tax line, usually labelled PAYE.
- Note your gross salary. Use the total taxable pay for the month, including taxable allowances.
- Calculate the correct PAYE. Enter that figure in our PAYE calculator, which uses the new 2026/27 bands.
- Compare. If the tax on your payslip is higher than the calculator’s figure, you were likely taxed at the old rate.
- Check September and October. If those months show the lower tax and a positive “tax adjustment” or “PAYE refund” line, your employer has already corrected it.
How To Ask Your Employer for the PAYE Refund
Most employers will fix this quickly once someone points it out. Keep the request polite, specific and in writing.
Subject: PAYE adjustment for July and August 2026
Dear [Name], I have reviewed my July and August 2026 payslips. Under the Income Tax (Amendment) Act 2026, the new PAYE rates apply from 1 July 2026, and URA’s notice of 7 September 2026 asks employers to amend returns filed at the old rates and refund any overpaid tax. Based on my gross salary of UGX [amount], I believe I was overtaxed by UGX [amount] per month. Could you please confirm whether this will be adjusted in an upcoming payroll? Thank you, [Your name]
If you do not get a clear answer, you can ask URA for guidance through its toll-free lines (0800 117 000 or 0800 217 000) or WhatsApp (0772 140 000), as listed on URA’s website.
Take-Home Pay Examples After the New PAYE Rates
Your take-home pay is gross salary minus PAYE, minus your 5% NSSF contribution, minus Local Service Tax where it applies. Your employer adds a further 10% NSSF on top, according to NSSF Uganda.
| Gross salary (UGX) | PAYE (new) | NSSF (5%) | Take-home before LST |
|---|---|---|---|
| 500,000 | 38,250 | 25,000 | 436,750 |
| 800,000 | 128,250 | 40,000 | 631,750 |
| 1,000,000 | 188,250 | 50,000 | 761,750 |
| 1,500,000 | 338,250 | 75,000 | 1,086,750 |
| 2,000,000 | 488,250 | 100,000 | 1,411,750 |
| 3,000,000 | 788,250 | 150,000 | 2,061,750 |
| 5,000,000 | 1,388,250 | 250,000 | 3,361,750 |
These figures matter when you are job hunting. A UGX 1.5 million offer leaves you with about UGX 1.09 million before LST, so always compare offers on take-home pay, not gross. Our list of the highest paying jobs in Uganda is a good place to see which careers pay at the top of these bands.
Special Cases: Non-Residents, Two Jobs and High Earners
- Non-residents are taxed on a different schedule. If you are not resident in Uganda for tax purposes, check the non-resident table on URA’s PAYE page rather than the bands above.
- More than one employer: URA states that employees with more than one employer are taxed at a flat 30% on total employment income. If you think this has overtaxed you, you can file a return covering all your income and claim back the overpayment.
- Earning above UGX 10 million: you still save UGX 13,750 a month, because the lower bands changed. The extra 10% on income above UGX 10 million stays in place.
- Fresh graduates and interns: if your monthly pay is UGX 335,000 or less, you pay no income tax under the new rates, though NSSF still applies where you are covered.
Expert Tips
- Keep every payslip. Save PDFs or photos each month. You cannot check a refund without them.
- Look for the adjustment line. Corrections often appear as “tax refund”, “PAYE adjustment” or a negative PAYE figure, not as a separate payment.
- Negotiate on net pay. When an employer offers a salary, run it through the calculator and know your take-home figure before you accept.
- Use the net-to-gross mode. If you need a specific take-home amount, our calculator works backwards to show the gross salary to ask for.
- Ask as a group. If several colleagues are affected, one polite email from the team is easier for HR to act on.
Common Mistakes To Avoid
| Mistake | Why it happens | Solution |
|---|---|---|
| Thinking the new rates started in September | URA updated its return form on 7 September | The legal start date is 1 July 2026. Check July and August too. |
| Applying 30% to the whole salary | Misunderstanding how tax bands work | Each band is taxed separately. Use the calculator. |
| Deducting NSSF before working out PAYE | Assuming NSSF reduces taxable pay | PAYE is worked out on gross taxable pay, then NSSF is deducted separately. |
| Expecting money from URA directly | Confusing personal refunds with employer refunds | For PAYE, your employer makes the correction through payroll. |
| Using outdated calculators | Many online tools still use the UGX 235,000 threshold | Check that any calculator shows UGX 335,000 as tax-free. |
How This Applies in Uganda’s Job Market
For most formal sector workers, the change adds up to a modest but real raise of up to UGX 165,000 a year. For low-paid workers, such as entry-level shop staff, security guards and junior office assistants, it can mean no income tax at all.
It also changes how you should read job adverts. A salary that looked too low last year may now leave you with more take-home pay. If you are applying for roles, see our guide on how to apply for jobs in Uganda and actually get responses, and browse current verified jobs with deadlines.
Comparing job offers? See the real take-home pay for any salary under the 2026/27 rates.
Calculate My Take-Home PayFrequently Asked Questions
What are the new PAYE rates in Uganda for 2026?
From 1 July 2026, monthly income up to UGX 335,000 is tax-free. Income from 335,001 to 410,000 is taxed at 20%, 410,001 to 485,000 at 25%, and above 485,000 at 30%. An extra 10% applies to income above UGX 10 million. These rates apply to resident individuals, as published by URA.
What is the tax-free salary in Uganda in 2026?
For resident employees, the first UGX 335,000 of monthly chargeable income is free of PAYE from 1 July 2026. This is up from UGX 235,000 under the old rates. The annual equivalent is UGX 4,020,000, as set out in the Income Tax (Amendment) Act 2026. NSSF contributions still apply even when you pay no tax.
Am I owed a PAYE refund for July and August 2026?
You may be, if your employer used the old rates for those months. Anyone earning UGX 485,000 or more was overtaxed by UGX 13,750 a month, so up to UGX 27,500 for both months. URA has instructed employers to amend those returns and refund employees, usually through a later payroll.
Who pays the PAYE refund, URA or my employer?
Your employer. URA’s notice says employers should amend the affected PAYE returns, use any resulting credit against later returns, and refund overpaid tax to employees. The refund normally appears as an adjustment on a later payslip rather than as a separate payment from URA, so check your next payslips carefully.
How much PAYE do I pay on UGX 1,000,000?
Under the new rates, a resident employee earning UGX 1,000,000 a month pays UGX 188,250 in tax, down from UGX 202,000 under the old rates. After 5% NSSF of UGX 50,000, take-home pay is UGX 761,750 before any Local Service Tax. That is UGX 13,750 more each month than under the old rates.
Is PAYE calculated before or after NSSF in Uganda?
PAYE is calculated on your gross taxable pay. The 5% employee NSSF contribution is then deducted separately. Both are taken from gross salary to arrive at net pay. If your payslip seems to calculate it differently, ask your payroll team to explain the method, because some older payroll systems still need updating.
Do the new PAYE rates apply to non-residents?
Non-resident individuals have a separate PAYE schedule with different rates. The bands in this article are for residents only. If you are not resident in Uganda for tax purposes, check the non-resident table on URA’s PAYE rates page or speak to a qualified tax adviser before relying on any calculator.
What if my employer refuses to refund the overpaid PAYE?
First, raise it in writing with HR or payroll and refer to URA’s notice of 7 September 2026. If it is still not resolved, contact URA for guidance on its toll-free lines 0800 117 000 or 0800 217 000, or WhatsApp 0772 140 000. Keep copies of your payslips and emails as evidence.
Conclusion
The new PAYE rates in Uganda for 2026 put more money in workers’ pockets: no PAYE up to UGX 335,000 a month, and a saving of UGX 13,750 every month for anyone earning UGX 485,000 or more.
Your action steps are simple. Pull out your July and August payslips, check the PAYE against our calculator, and if you were taxed at the old rate, send a short email to HR asking for the adjustment URA has instructed employers to make.
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