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Taxable vs exempt salary income in Egypt: what goes into the tax base

Which parts of an Egyptian salary are taxed and which are exempt: the EGP 20,000 exemption, allowances, bonuses, overtime, in-kind benefits and social insurance.

Last reviewed: 30 Oct 2026 · Laws covered: Income Tax Law 91/2005 · Law 10/2018 · Law 7/2024

Almost everything an employee receives for their work in Egypt is taxable: basic pay, allowances, bonuses, overtime, commissions and benefits in kind. The law then takes a short list of items back out of the tax base, chiefly the EGP 20,000 annual personal exemption, the employee's social insurance contributions, certain private insurance premiums up to a cap, and collective benefits such as meals, transport and health care. Knowing which side of the line each pay element falls on is the first step in getting monthly salary tax right.

The starting point: what is taxable

Article 9 of Income Tax Law 91/2005 taxes "salaries and the like", which means everything paid to an employee because of their employment, in cash or in kind, including:

  • Basic salary and wages.
  • Allowances of all kinds: housing, transport, cost of living, nature-of-work, representation and similar allowances paid in cash.
  • Bonuses, incentives, commissions and profit-related pay (except the legally distributed employees' profit share, see below).
  • Overtime pay. Overtime is ordinary taxable income; the Labour Law sets the rate at which it is paid, but the tax law gives it no special treatment.
  • Benefits in kind: company cars for private use, housing, loans at low interest, mobile phones, shares and anything else with a money value. The executive regulations say how each is valued (for example, a car is valued at a percentage of its cost, and insurance benefits at the premiums the employer paid).
  • Amounts paid after the employment ends that relate to it, such as end-of-service gratuities beyond what is exempt.

The tax applies whether the salary is paid in Egypt or abroad, as long as the work is done in Egypt or the payer is an Egyptian entity.

What is exempt: Article 13

Article 13 of the law, as amended by Law 7/2024 and Law 10/2018, lists the deductions and exemptions. The table below is the current reading used by Egyptian payroll practice.

ItemRule in 2026
Personal exemptionEGP 20,000 a year for every employee. EGP 30,000 (1.5 times) for an employee with a disability or who supports a person with a disability (Law 10/2018 as updated by Law 7/2024).
Social insuranceThe employee's 11% share under Law 148/2019, and any contributions deducted under an alternative scheme, are deducted in full.
Private insurance fundsEmployee contributions to private insurance funds set up under Law 54/1975.
Life, health and pension premiumsPremiums paid by the employee for life or health insurance for themselves, their spouse or minor children, and for a pension. Together with private-fund contributions these are capped at 15% of net income or EGP 10,000 a year, whichever is lower.
Collective in-kind benefitsMeals provided to workers at the workplace, collective transport (or its equivalent cost), health care, tools and clothing needed for the job, and housing provided by the employer for the needs of the work. No upper limit, but the benefit must be collective, not a cash payment to one person.
Employees' profit shareThe share of profits distributed to employees under the law (for example under the Companies Law).
Diplomatic staffPay of members of foreign diplomatic and consular missions, subject to reciprocity.

Two points that payroll teams ask about most:

  • Representation allowance. Under the old Law 157/1981 part of it was exempt. Law 91/2005 removed that exemption, so a representation allowance paid in cash is now fully taxable like any other allowance.
  • Disability. There are two separate rules. The employee's own exemption rises to EGP 30,000. In addition, Law 10/2018 gives an employer whose workforce is more than 5% persons with disabilities an increase in the exemption for each extra employee hired; this is applied by the ETA on application and is rarely used in routine payroll, so confirm it with the authority before relying on it.

What is deducted, and what only looks deducted

Only three things reduce the salary tax base: the Article 13 exemptions above, the employee's social insurance, and the rounding down to EGP 10. The Martyrs' and Victims' Fund deduction (0.05% of gross, Law 16/2018) and the employer's contributions (18.75% insurance, 1% Emergency Fund) reduce net pay or add to employer cost but do not reduce taxable income. SalaryEG treats them this way.

Worked example

An employee earns EGP 10,000 a month, all of it insurable (no allowance split), and has no private insurance.

  • Taxable gross: EGP 10,000 a month, EGP 120,000 a year. There is nothing to exclude: salary, allowances and any bonus are all in.
  • Deductions from the tax base: employee social insurance 11% × 10,000 = EGP 1,100 a month (EGP 13,200 a year), plus the EGP 20,000 personal exemption.
  • Annual net taxable income: 120,000 − 13,200 − 20,000 = EGP 86,800 (already a multiple of 10).
  • Tax: 0% on 40,000; 10% on 15,000 = 1,500; 15% on 15,000 = 2,250; 20% on 16,800 = 3,360. Annual tax EGP 7,110, monthly EGP 592.50.
  • The 0.05% Martyrs' Fund deduction of EGP 5 comes out of net pay but does not reduce the taxable income.
  • Net pay: 10,000 − 1,100 − 592.50 − 5 = EGP 8,302.50.

If the same employer paid for a collective bus and a workplace canteen, those costs would not be added to the EGP 10,000. If instead it paid a EGP 500 cash "transport allowance", that EGP 500 would be taxable.

Try it in the calculator

Common mistakes

  • Labelling a cash payment "transport" or "meals" and treating it as exempt. The exemption covers benefits provided collectively, not cash allowances paid to individuals.
  • Deducting the insurance premium cap twice. The 15% / EGP 10,000 limit is one combined ceiling for private-fund contributions and life, health and pension premiums together.
  • Exempting the employer-paid private medical insurance. Health care provided collectively is exempt; a cash health allowance is not. Employer-paid life insurance premiums on an individual policy are normally a taxable benefit, valued at the premium.
  • Forgetting overtime and bonuses in the annual figure. They are taxable in the month paid and must be included when the annual tax is recalculated, which is where the year-end settlement catches up.
  • Applying the EGP 30,000 disability exemption without documentation. The ETA expects proof of the disability status (the integrated services card) on file.

FAQ

Are allowances taxed differently from basic salary?

No. For tax purposes the law looks at the total, so a basic wage of EGP 10,000 plus EGP 3,000 in allowances is taxed exactly like a basic wage of EGP 13,000. Allowances matter for social insurance (where practice often insures the basic only) but not for the tax base.

Is overtime taxable in Egypt?

Yes, in full, in the month it is paid. Labour Law 14/2025 sets the overtime premium (an extra 35% for daytime hours and 70% for night hours), but none of it is tax free.

Is end-of-service pay taxable?

Pay for unused leave, bonuses and similar amounts paid at termination are taxable salary. Statutory severance and the social-insurance lump sums have their own rules; ask an adviser before running a final settlement.

Do mobile phone and internet reimbursements count as salary?

If the employer pays the provider directly for a tool needed for the job, it is generally treated as an exempt work tool. A fixed cash allowance paid to the employee is taxable.

Sources

General information, not legal or tax advice. Rules change; check the official sources and your adviser for your situation.