Ethiopian income tax rate table in a progressive tax system, meaning that the rate of taxation increases as the income of an individual or entity increases. Below is a simplified version of the income tax rate table for individuals in Ethiopia:
🇪🇹 Ethiopia Individual Income Tax Rates (2026)
1. Monthly Employment Income (PAYE)
| Monthly Income (ETB) | Tax Rate |
|---|---|
| 0 – 2,000 | 0 % |
| 2,001 – 4,000 | 15 % |
| 4,001 – 7,000 | 20 % |
| 7,001 – 10,000 | 25 % |
| 10,001 – 14,000 | 30 % |
| Over 14,000 | 35 % |
Notes:
• First Birr 2,000 monthly is tax-exempt.
• Progressive system: only income in each bracket is taxed at that bracket’s rate.
2. Annual Rental Income (Individuals)
| Annual Rental Income (ETB) | Tax Rate |
|---|---|
| 0 – 24,000 | 0 % |
| 24,001 – 48,000 | 15 % |
| 48,001 – 84,000 | 20 % |
| 84,001 – 120,000 | 25 % |
| 120,001 – 168,000 | 30 % |
| Over 168,000 | 35 % |
Notes: Applies to rental earnings from homes, apartments, and other property rentals by individuals.
3. Annual Business Income (Individuals)
| Annual Business Income (ETB) | Tax Rate |
|---|---|
| 0 – 24,000 | 0 % |
| 24,001 – 48,000 | 15 % |
| 48,001 – 84,000 | 20 % |
| 84,001 – 120,000 | 25 % |
| 120,001 – 168,000 | 30 % |
| Over 168,000 | 35 % |
Notes: Applies to profit from business activities conducted by individuals (excluding Category B gross sales regime).
4. Category B (Gross Sales Tax) – Small Businesses
For small individuals with annual gross sales under ETB 2,000,000, a gross sales tax is applied instead of normal profit tax:
| Annual Gross Sales (ETB) | Tax Rate |
|---|---|
| 0 – 100,000 | 2 % |
| 100,001 – 500,000 | 3 % |
| 500,001 – 1,000,000 | 5 % |
| 1,000,001 – 1,500,000 | 7 % |
| 1,500,001 – 2,000,000 | 9 % |
Note: This regime simplifies tax for small traders and micro-businesses.
This table offers a clear understanding of how income tax is calculated in Ethiopia, enabling individuals to better manage their finances and plan for their tax obligations.
