What changed
The tax-free threshold rose from UGX 235,000 to UGX 335,000 a month, which removes the old 10% band. A new 25% band covers UGX 410,000 to UGX 485,000, between the 20% and 30% bands. The 40% rate above UGX 10 million is unchanged.
Monthly PAYE bands
| Pay a month | Rate |
|---|---|
| UGX 0 to UGX 235,000 | 0% |
| UGX 235,000 to UGX 335,000 | 10% |
| UGX 335,000 to UGX 410,000 | 20% |
| UGX 410,000 to UGX 10,000,000 | 30% |
| Above UGX 10,000,000 | 40% |
| Pay a month | Rate |
|---|---|
| UGX 0 to UGX 335,000 | 0% |
| UGX 335,000 to UGX 410,000 | 20% |
| UGX 410,000 to UGX 485,000 | 25% |
| UGX 485,000 to UGX 10,000,000 | 30% |
| Above UGX 10,000,000 | 40% |
What it does to a payslip
The same monthly pay, worked out by the engine on 30 June 2026 and again on 1 July 2026, with nothing else changed.
| Gross a month (UGX) | Take-home before | Take-home after | Change |
|---|---|---|---|
| 1,000,000 | 748,000 | 761,750 | +13,750 |
| 3,000,000 | 2,048,000 | 2,061,750 | +13,750 |
| 8,000,000 | 5,298,000 | 5,311,750 | +13,750 |
Who it affects
Everyone earning more than UGX 335,000 a month takes home UGX 13,750 more: UGX 10,000 from the 10% band going, and UGX 3,750 from the 25% band replacing 30% on the next UGX 75,000.
How Payloom handles a change like this
The old rule closes on 30 June 2026 and the new one starts on 1 July 2026, both checked against the source and countersigned before they can price a real payroll. Months already paid keep the rules they were paid on, for good. A month calculated before the new rule arrived is marked out of date, and approving it is refused until it is worked out again.
Source
The gazetted Income Tax (Amendment) Act, 2026, read against the Act's own text. URA's published rates page was still showing the old bands when it was checked.
More rate changes
- Ghana's new PAYE bands from 1 September 2026 from 1 September 2026
- British Columbia's payroll tax changes from 1 July 2026 from 1 July 2026
- Utah's withholding rate falls to 4.45% from 1 June 2026 from 1 June 2026
- Kenya's NSSF limit rises to KES 108,000 from 1 February 2026