๐จ๐ป๐ฑ๐ฒ๐ฟ๐๐๐ฎ๐ป๐ฑ๐ถ๐ป๐ด ๐๐ต๐ฒ ๐๐ฟ๐ฒ๐ป๐ฑ๐ถ๐ป๐ด ๐ฃ๐๐ฌ๐ ๐๐ฎ๐ ๐ฝ๐ถ๐ฐ๐๐๐ฟ๐ฒ.
Iโm sure by now many of you have seen this picture trending. Unfortunately, people are misinterpreting how much tax people are paying.
This picture isnโt saying, that if you are earning K10,000 you pay 37% (K3,700) in taxes. Our tax is high but not that high 
.
๐๐ฒ๐ ๐บ๐ฒ ๐ฒ๐ ๐ฝ๐น๐ฎ๐ถ๐ปโฆ
Our tax is whatโs known as progressive, you donโt pay the same amount of tax on all the kwachas you earn.
Using the same example of K10,000 this is the breakdown:
โ The first K5,100 for everyone is tax free. So if your gross is K5,100 zero tax is deducted.
โ The next K2,000 above that K5,100 is what gets taxed at 20%. So if you earned K7,100, you only pay 20% of K2,000 in taxes. Which is K400
โ The next K2,100 above the K7,100 is what is taxed at 30% =K630.
โ Then, finally, only the amounts above K9,200 that are remaining get taxed at the highest threshold of 37%.
In this case if you are earning K10,000 the remaining amount to be taxed is K800. Which would give a tax burden of K296.
๐ง๐ต๐ฒ๐ฟ๐ฒ๐ณ๐ผ๐ฟ๐ฒ ๐ถ๐ป ๐๐ผ๐๐ฎ๐นโฆ
You were never charged 37% on the full K10,000 which would be K3,700
But โonlyโ K400 + K630 + K296 = ๐๐ญ,๐ฏ๐ฎ๐ฒ.
I hope this clears this up. 
Make sure to share this post so others can understand as well how paye tax is ๐๐๐๐๐๐๐๐ calculated.
NB: This is strictly calculating tax deductions and does not include NAPSA, Nhima and other deductions you may have.
Credit: Chanozya Kabaghe
GET MORE NEWS UPDATES
