Here's how 20,000 Birr works out. The first 2,000 is free of tax. The next 2,000 at 15% is 300, the next 3,000 at 20% is 600, the next 3,000 at 25% is 750, the next 4,000 at 30% is 1,200, and the last 6,000 at 35% is 2,100. That's 4,950 in tax. Pension is 7% of 20,000, which is 1,400. So 20,000 less 4,950 less 1,400 leaves 13,650 Birr. It's an estimate, not tax advice.
What is the income tax table in Ethiopia now?
This is the monthly table in Proclamation 1395/2025. It was published on 1 September 2025 and applies to income from 8 July 2025, which is Hamle 1, 2017 EC. If a payroll sheet or a website still starts its table at 600 Birr, it's using the old law.
- 0 to 2,000 Birr: 0%
- 2,001 to 4,000 Birr: 15%
- 4,001 to 7,000 Birr: 20%
- 7,001 to 10,000 Birr: 25%
- 10,001 to 14,000 Birr: 30%
- Over 14,000 Birr: 35%
How much do I take home on common salaries?
Each line treats the whole sum as basic salary. We worked each one by hand against the table.
- 2,000 Birr: tax 0, pension 140, net 1,860
- 4,000 Birr: tax 300, pension 280, net 3,420
- 6,000 Birr: tax 700, pension 420, net 4,880
- 10,000 Birr: tax 1,650, pension 700, net 7,650
- 15,000 Birr: tax 3,200, pension 1,050, net 10,750
- 20,000 Birr: tax 4,950, pension 1,400, net 13,650
- 30,000 Birr: tax 8,450, pension 2,100, net 19,450
- 50,000 Birr: tax 15,450, pension 3,500, net 31,050
Why doesn't my pension lower my tax?
Because Proclamation 979/2016 taxes the total monthly income you receive, and Article 10(3) says an employee can't deduct the costs of earning it. So tax is worked on your full pay first, and your 7% comes off after. If a sum takes pension off first, it's wrong for Ethiopia. On 20,000 Birr it gives 4,460 in tax, which is 490 Birr too low.
Your employer pays another 11% on top. That's its own cost, and it doesn't come out of your pay.
What if part of my pay is an allowance?
Pension is worked on basic salary only, while a taxable allowance still counts for tax. Say your basic is 15,000 Birr with a 3,000 taxable allowance. Tax is on 18,000, which is 4,250. Pension is 7% of 15,000, which is 1,050. You keep 12,700. If you type 18,000 into the calculator it shows 12,490, because it treats it all as basic, so a real payslip with allowances can be a little higher.
Two allowances have tax free limits, in the Ministry of Revenues answer on allowances. Per diem is free up to 500 Birr a day or 4% of your salary, whichever is higher. Travel allowance is free up to a quarter of your monthly salary, and never above 2,200 Birr. We couldn't confirm whether an ordinary monthly commuting allowance counts as that travel allowance, so ask your payroll office.
What does this sum leave out?
- Nehase and Pagume: pay for these two months is added together and taxed as one month, under Article 10(4). The calculator treats a normal month.
- Health insurance: we couldn't open an official rate or a start date for private employers, so nothing is taken off for it. Check your payslip.
- Two jobs: if you have more than one employer in a year, you have to file a declaration within 30 days of the end of the year.
Questions people ask
How much tax do I pay on 10,000 Birr a month?
1,650 Birr. That's 0 on the first 2,000, 300 on the next 2,000, 600 on the next 3,000 and 750 on the last 3,000. With 700 pension, you keep 7,650.
How much salary is free of income tax in Ethiopia?
The first 2,000 Birr a month, since 8 July 2025. You still pay 7% pension on it if you're covered by a pension scheme.
Is there a quick formula for the tax?
Yes, for pay over 14,000 Birr, tax is pay x 35% minus 2,050. The other bands are 15% minus 300, 20% minus 500, 25% minus 850 and 30% minus 1,350. We worked those deductions out from the table, the law doesn't print them.
Is pension capped at some salary?
We found no ceiling in Proclamation 1268/2022, so the calculator takes 7% of the whole sum however high it is.
Does anyone see what I type?
No. The sum runs on your own phone or computer, and nothing is sent or kept.
Sources
Checked 2 November 2026.