The 2026 Budget and Your Salary
Presented to Parliament on 26 September 2025 by Dr Situmbeko Musokotwane, Minister of Finance and National Planning. A K253.1 billion budget for 1 January to 31 December 2026. Parliament of Zambia.
PAYE did not change: the first K5,100 a month stayed tax free and the 20%, 30% and 37% bands stayed where they were. The main changes were for small businesses, with more income free of turnover tax and a much lower penalty for paying it late.
What the 2026 budget announced
PAYE unchanged
The tax-free threshold stayed at K5,100 a month, or K61,200 a year, and the 20%, 30% and 37% bands did not move. PAYE on the same salary was the same in 2026 as in 2025.
No change to NAPSA, NHIMA or the Skills Development Levy
NHIMA stayed at 1% of basic pay from both employer and employee, and the Skills Development Levy at 0.5% of payroll.
More income free of turnover tax
The first K2,500 a month of turnover is now free of turnover tax, up from K1,000. The same threshold applies to rental income tax.
A smaller penalty for paying turnover tax late
The late payment penalty on turnover tax fell to 0.5% a month from 5%.
No penalties for owning up
A taxpayer who tells ZRA about an error or omission before ZRA finds it no longer pays penalties on it.
Employing people with disabilities
The company tax deduction for employing persons with disabilities rose to K2,500 a year from K2,000.
Excise and customs changes
Excise duty on single-use plastics rose to 100% from 30%. Excise duty on new hybrid cars fell to 15% from 30%. Customs duty on imported powdered milk for resale, cheese, yoghurt, long-life milk and processed meat rose to 40% from 25%.
Piped water zero-rated for VAT
Mains water supplied by water utilities became zero-rated, so the utilities can claim back the VAT on their costs. The standard VAT rate stayed at 16%.
When it applied
The measures took effect on 1 January 2026.
What it means for your pay
The PAYE bands are the same in 2026 as in 2025, so PAYE on the same salary did not change.
PAYE bands for 2026
| Monthly income (K) | Rate |
|---|---|
| First K5,100First 5,100 | Tax free |
| K5,101 to K7,1005,101 to 7,100 | 20% |
| K7,101 to K9,2007,101 to 9,200 | 30% |
| Above K9,200Above 9,200 | 37% |
Other budgets
- The 2027 budget, read on 6 November 2026
- The national budget and your salary: the bands in force and how the budget reaches your payslip
Bands from the same configuration the calculator runs on. Source: Zambia Revenue Authority (ZRA); cross-checked against PwC Worldwide Tax Summaries and KPMG Zambia budget highlights. Nothing here is tax advice. Confirm your position with ZRA or a registered tax agent.