Govt Statement clarifying Personal Income Tax Threshold and Rates in 2025

Since presenting Budget 2025 on Friday afternoon, I have been in receipt of several requests to explain in further detail the adjustments that our Government is proposing to the provisions regarding the rates of personal income tax.

It is worthwhile to recall that the APNU/AFC had introduced in 2017 two rates of income tax, 28 percent and 40 percent. At the time, they also set the threshold at $60,000 monthly (or 1/3 of the salary whichever is greater). As a result, at that time:

• The first $60,000 of the monthly salary (or 1/3 of the salary if that is greater) would be taxed at zero percent;
• The next $120,000 of the monthly salary (twice the amount of the threshold) would be taxed at 28 percent; and
• The remainder of the monthly salary above that would be taxed at 40 percent.

Our Government’s intention is now to make the following adjustments in 2025 to the threshold and rates of personal income tax payable:

• Increase the threshold to $130,000 monthly; and
• Lower the tax rates of 28 percent and 40 percent, to 25 percent and 35, respectively.

As a result of these proposed changes:

• The first $130,000 of the monthly salary (or 1/3 of the salary if that is greater) will now be taxed at zero percent;
• The next $260,000 of the monthly salary (twice the amount of the threshold) would now be taxed at 25 percent; and
• The remainder above that would now be taxed at 35 percent.

Additionally, of course, the allowance of $10,000 per child monthly, and the allowances of up to $50,000 monthly for overtime and up to $50,000 monthly for income earned from a second job, will also be taxed at zero percent.

The Estimates of Revenue and Expenditure for 2025 that were tabled already incorporate the above adjustments, even though this full elaboration was not provided in the Budget Speech.

These changes will be reflected in proposed amendments to the Income Tax Act to give legal effect from Year of Income 2025.

 

Hon. Dr. Ashni K. Singh, M.P.

Senior Minister in the Office of the President

with Responsibility for Finance and the Public Service