How monthly salary tax is calculated in Egypt, step by step

Monthly salary tax in Egypt is one-twelfth of an annual calculation. You take the monthly taxable pay, multiply by 12, deduct the employee's social insurance and the EGP 20,000 personal exemption, round the result down to the nearest EGP 10, run it through the progressive brackets, and divide the annual tax by 12. Done consistently every month, this produces the same total as the year-end settlement, with no surprises for the employee.

The six steps

Step	What to do	Where it comes from
1	Add up the month's taxable pay: basic, allowances, bonuses, overtime, taxable benefits in kind	Article 9, Law 91/2005
2	Multiply by 12 to get the annual taxable gross (or use actual year-to-date pay plus the expected remainder)	Payroll practice; the tax is annual
3	Deduct the employee's social insurance for the year (11% of the insurable wage × 12)	Article 13 and Law 148/2019
4	Deduct the EGP 20,000 personal exemption	Article 13 as amended by Law 7/2024
5	Round down to the nearest EGP 10, then apply the brackets (and the tier rule above EGP 600,000) to get the annual tax	Article 8 as amended by Law 26/2020
6	Divide by 12: that is this month's withholding	Article 14: employer withholds and remits monthly

1. Gross salary
2. − Employee social insurance (11% of insurable wage)
3. − Personal exemption (20,000 ÷ 12)
4. = Taxable income (rounded down to EGP 10 a year)
5. × Brackets → salary tax
6. − Tax − Martyrs' Fund 0.05% − other deductions
7. = Net pay

The round-down-to-10 rule

Law 26/2020 added a sentence to Article 8: when computing the tax, the annual net income is rounded to the nearest lower ten pounds. So EGP 144,769.24 becomes EGP 144,760 and EGP 111,815.44 becomes EGP 111,810. It is a small amount (at most EGP 9.99 of taxable income, so at most about EGP 2.75 of tax a year) but the ETA's own calculation uses it, and your figures will only match the authority's if you apply it on the annual figure before the brackets.

The 2026 inputs you need

• Employee social insurance: 11% of the insurable wage, which in 2026 is bounded between EGP 2,700 and EGP 16,700 a month (Law 148/2019 and the January 2026 adjustment).
• Personal exemption: EGP 20,000 a year.
• Brackets: 0% to 40,000; 10% to 55,000; 15% to 70,000; 20% to 200,000; 22.5% to 400,000; 25% to 600,000; then the tiers, with 27.5% on everything above EGP 1,200,000.

Worked example 1: EGP 12,000 with a 30% allowance split

Try it in the calculator

Worked example 2: EGP 35,000, fully insurable, at the insurance cap

Try it in the calculator

When pay changes during the year

The "multiply by 12" shortcut assumes a flat salary. When a raise, a bonus or overtime changes the picture, there are two accepted ways to keep the withholding right:

• Recalculate each month on the new run-rate. Annualise the new monthly pay from the month it changes. Simple, and the annual settlement in January fixes any difference.
• Cumulative (year-to-date) method. Add actual pay to date plus expected pay for the remaining months, compute the annual tax, subtract tax already withheld, and withhold the balance spread over the remaining months. This is more accurate and produces a smaller settlement. SalaryEG uses the run-rate method for monthly figures; the annual settlement guide explains the reconciliation.

One-off payments such as a bonus are taxable in the month paid. Many payroll teams add the bonus to the annual taxable gross for that month's calculation, tax it at the employee's marginal band, and let the year-end settlement true up.

Common mistakes

• Rounding the monthly figure instead of the annual one. The rule applies to the annual net taxable income.
• Rounding up, or to the nearest 10. It is always down.
• Deducting insurance on the gross when the company insures the basic. Use the insurance actually deducted from the employee; the tax base follows it. If the company insures the full gross (as the law's definition of insurable wage would suggest), use that.
• Leaving out the insurance cap. Above EGP 16,700 the insurance deduction stops growing, so the taxable income grows faster than it looks.
• Starting from net. If an offer is quoted net, you must solve for the gross that produces that net (SalaryEG's net-to-gross mode does this); grossing up by a fixed percentage will be wrong because the brackets are progressive.

FAQ

Is the EGP 20,000 exemption applied as EGP 1,666.67 a month?

For presentation, yes, and SalaryEG shows it that way. But the legal calculation is annual: EGP 20,000 deducted once from the annual figure, then rounded, then divided by 12. For a flat salary the two approaches give the same monthly tax apart from rounding.

What if the employee joined mid-year?

The exemption and the brackets are still annual. For withholding, most employers annualise the monthly pay as usual. At year end the employee is entitled to the full EGP 20,000 exemption for the year; if they had a previous employer, the ETA reconciles both employers' figures through the annual settlement and the employee's own return where required.

Does the 0.05% Martyrs' Fund deduction reduce the tax?

No. It is deducted from net pay but does not reduce the taxable income. Only the employee's social insurance and the Article 13 exemptions reduce the tax base.

Where does the tax go each month?

The employer pays the withheld tax to the ETA, together with the quarterly Form 4 declaration and the annual settlement. See the annual settlement guide for deadlines.

Sources

• Income Tax Law 91/2005, Articles 8, 9, 13 and 14, as amended by Law 26/2020 and Law 7/2024 (Official Gazette).
• EY Tax Alert, "Egypt amends progressive individual income tax rates" (Law 26/2020, rounding rule): https://taxnews.ey.com/news/2020-1311
• PwC Tax Summaries, Egypt, Individual, Taxes on personal income: https://taxsummaries.pwc.com/egypt/individual/taxes-on-personal-income
• Andersen Egypt, "Egypt's Personal Income Tax in 2026": https://eg.andersen.com/personal-income-tax/
• Social Insurance and Pensions Law 148/2019 and the NOSI insurable wage limits for 2026.