Uganda PAYE Tax 2026/27: URA Bands, NSSF and Payroll Change Guide

Update (July 2026): the FY 2026/27 PAYE changes are now in force. Since July 1, 2026, the monthly resident PAYE exemption is USh 335,000, the old 10% band is gone, and a new 25% band applies on USh 410,001–485,000. This guide covers the new bands, how June 2026 and earlier payslips differ, and what employers must change in payroll systems.

Resident PAYE rates were checked on 16 September 2026 against URA’s notice dated 7 September 2026. Earlier source reviews remain the basis for other payroll topics.

Use the Uganda PAYE Calculator for a current estimate. Keep historical payroll records on the rules that applied to their period.

Uganda Payroll Snapshot: September 2026 Review

The most important editorial distinction is that the 2026/27 law change is not a reason to recalculate May or June 2026 payslips. The Income Tax (Amendment) Bill, 2026 states that the Act shall come into force on July 1, 2026. Parliament's own news report says the Bill was passed on April 23, 2026 and that employees earning USh 335,000 per month will be exempt from PAYE. The new tax year has now started: July 2026 payroll onward runs on the new bands, while June 2026 and earlier payslips remain on the old 2025/26 rules.

Current Uganda PAYE Bands for 2025/26 Payroll

The following table is historical: it applies to resident payroll before July 2026. It is retained to explain differences in earlier payslips.

For non-resident employees, URA material uses a different structure with no resident tax-free band. The AfroTools Uganda calculator explains the non-resident treatment separately because the resident threshold discussion can otherwise create a false expectation for expatriate or short-term employees.

For example, monthly resident chargeable income of USh 320,000 is below the new exemption. Under the former USh 235,000 threshold, part of that income was taxable.

What Parliament Passed for 2026/27

The Uganda Parliament tax-bills page lists the Income Tax (Amendment) Bill, 2026 among the 2026 tax bills. The Bill text says the Act shall come into force on July 1, 2026 and amends Schedule 4 to revise individual income tax rates. Parliament's April 23, 2026 news report then says the Income Tax (Amendment) Bill, 2026 was passed and that the Bill exempts employees earning USh 335,000 per month from PAYE.

URA has since confirmed that the revised resident monthly threshold is USh 335,000 from July 1, 2026. The Bill text also shows a new annual resident table beginning with no tax on chargeable income not exceeding USh 4,020,000. That annual amount equals USh 335,000 per month.

URA has published operational guidance. Its September 8 clarification confirms that the Act received assent on August 20, 2026, with effect from July 1, 2026. Employers who used the old rates for July or August 2026 should review the affected returns and payroll adjustments using the notice.

Formula Walkthrough Using Published Thresholds

Use a formula walkthrough only where the numbers come from official thresholds. For a resident employee earning USh 500,000 per month under the FY 2026/27 table (from July 1, 2026), the PAYE calculation is:

1. The first USh 335,000 is taxed at nil.
2. The next USh 75,000, from USh 335,000 to USh 410,000, is taxed at 20%, giving USh 15,000.
3. The next USh 75,000, from USh 410,000 to USh 485,000, is taxed at 25%, giving USh 18,750.
4. The remaining USh 15,000, from USh 485,000 to USh 500,000, is taxed at 30%, giving USh 4,500.
5. Total PAYE is USh 38,250.

Under the old 2025/26 table (June 2026 payslips and earlier), the same salary attracted USh 52,000 of PAYE — the new bands save this employee USh 13,750 per month.

NSSF is then a separate payslip deduction. At USh 500,000 gross salary, the employee NSSF deduction at 5% is USh 25,000, while the employer contribution at 10% is USh 50,000. The employee's cash net before any Local Service Tax or other deductions would be gross salary minus PAYE minus employee NSSF, or USh 436,750. This is a formula example based on official thresholds, not a fictional household story.

HR and finance teams should keep separate calculation versions for the two periods: FY 2026/27 bands from July 2026 onward, and the old 2025/26 bands for historical payslips.

NSSF and Local Service Tax Are Separate From PAYE

NSSF is often confused with PAYE because it appears on the same payslip. They are different obligations. NSSF Uganda says all employers, irrespective of the number of employees, are covered for employees between 16 and 55 years of age, except employees under the Government Pensions scheme. The employer deducts 5% from the employee's total gross monthly wage and adds 10% from the employer, making a total contribution of 15% for each employee. NSSF also says contributions must be paid by the 15th day of the following month.

For take-home pay, that means the employee sees PAYE and employee NSSF as deductions. For employer budgeting, the 10% employer NSSF contribution is a real cost of employment but it is not subtracted from employee cash pay. This distinction matters when comparing gross salary, net salary and total employer cost.

Local Service Tax is also separate. AfroTools models it outside the PAYE bands because it is an annual local-government levy rather than a URA income-tax band. Payroll teams should keep LST in the calendar, document how it is collected, and avoid presenting it as part of the PAYE threshold change.

Employer Payroll Workflow for the 2026 Changeover

For payroll from July 2026 onward, use a dated workflow:

1. Keep May and June on current bands. Do not apply the USh 335,000 threshold before the July 1, 2026 commencement date.
2. Tag the payroll version. Label July 2026 onward as 2026/27 and retain the 2025/26 basis for earlier payroll.
3. List employees near the threshold. Employees between USh 235,000 and USh 335,000 per month are most affected by the threshold change.
4. Separate PAYE, NSSF and LST notes. A PAYE threshold change does not remove the employee 5% NSSF deduction or employer 10% cost.
5. Review non-resident employees separately. Do not assume resident exemptions apply to non-resident payroll.
6. Use the published URA notice. Review affected July and August returns if they used the previous rates.
7. Archive the old calculation logic. Payroll audits need to explain why June and July payslips used different thresholds.

The largest compliance risk is not the arithmetic. It is version control. If the same spreadsheet, HRIS or calculator is silently overwritten, old payslips become hard to defend. Keep the old logic available for historic payroll periods and add a dated 2026/27 configuration for the new year.

How This Connects to AfroTools

The Uganda PAYE Calculator now uses the resident schedule effective July 2026. It shows NSSF separately and applies optional LST before PAYE.

Use the PAYE calculator hub and Salary and Tax hub for related tools. Check each country’s source date and assumptions before comparing results.

Employees can estimate current net pay; payroll teams should reconcile the estimate against their approved payroll records and applicable adjustments.

Source Notes and Verification Limits

The September URA notice supports the revised resident schedule. It does not independently verify every NSSF, LST, non-resident or special-regime rule discussed here.