Free tool · Ethiopian payroll · instant
What's your take-home pay?
Enter a gross monthly salary and see the full gross-to-net picture the way Ethiopian payroll actually computes it: income tax from the current brackets, the 7% employee pension, and what the employer really pays in total.
Rates per Income Tax Proclamation 1395/2025 (effective July 2025) and Labour Proclamation 1156/2019 where noted. Estimates only — verify with the Ministry of Revenues or your advisor.
Pension scheme applies
Private-organization pension: 7% employee / 11% employer, on basic salary.
Before tax and pension — the contractual basic salary.
Non-taxable up to ¼ of basic salary, max 2,200 ETB — any excess is taxed automatically.
Allowances taxed like salary (most cash allowances).
Other amounts that are fully exempt from income tax.
How income tax is calculated in Ethiopia.
Ethiopian employment income tax is progressive: your salary is split across brackets, and each slice is taxed at that slice's rate. In practice payroll uses a shortcut — multiply taxable income by the bracket rate, then subtract a fixed deduction that compensates for the lower slices.
Worked example: on a taxable salary of 10,000 ETB, tax is 10,000 × 25% − 850 = 1,650 ETB. Add the 7% employee pension (700 ETB) and take-home is 7,650 ETB.
Ethiopian income tax brackets (July 2025)
| Monthly taxable income (ETB) | Rate | Deduction |
|---|---|---|
| 0 – 2,000 | Exempt | — |
| 2,000 – 4,000 | 15% | 300 |
| 4,000 – 7,000 | 20% | 500 |
| 7,000 – 10,000 | 25% | 850 |
| 10,000 – 14,000 | 30% | 1,350 |
| Over 14,000 | 35% | 2,050 |
Per Income Tax Proclamation 1395/2025. Tax = taxable income × rate − deduction.
Pension: who pays what
Private organizations registered under the pension scheme contribute 18% of basic salary in total: 7% deducted from the employee and 11% paid by the employer on top. The base is basic salary — allowances and overtime are not pensionable. NYLOS computes both sides automatically on every run; here's how pension automation works.
What changed in July 2025
Income Tax Proclamation 1395/2025 raised the tax-free threshold from 600 to 2,000 ETB per month and revised every band above it — the first bracket change in nearly a decade. Payrolls that still run the old table over-deduct on every payslip. Read what changed and what it means for your payroll, or see how NYLOS keeps the tables current for you. Expecting a bonus? Check the bonus tax calculator.
Frequently asked questions.
What salary is tax-free in Ethiopia?
Monthly employment income up to 2,000 ETB is exempt from income tax under Income Tax Proclamation 1395/2025, effective July 2025. Anything above that is taxed at progressive rates from 15% up to 35%.
How much tax do I pay on a 15,000 ETB salary?
A taxable salary of 15,000 ETB falls in the 35% bracket: 15,000 × 35% − 2,050 = 3,200 ETB income tax. With the 7% employee pension (1,050 ETB), take-home pay is 10,750 ETB. The 35% rate only applies at the margin — the effective tax rate here is about 21%.
Is transport allowance taxable in Ethiopia?
Transport allowance is exempt from income tax up to one quarter (25%) of your basic salary, capped at 2,200 ETB per month — whichever is lower. Anything above that exempt portion is taxed like salary. Enter your transport allowance in this calculator and it applies the cap automatically.
Who pays pension contributions, and on what amount?
Under the private-organization pension scheme, the employee contributes 7% and the employer contributes 11% of basic salary (not gross). The employer share is paid on top of your salary — it is never deducted from your pay.
When did the new income tax brackets take effect?
The revised employment income tax schedule in Income Tax Proclamation 1395/2025 applies from July 2025 (Hamle 2017 EFY) payrolls onward. It raised the tax-free threshold to 2,000 ETB per month.
What does an employee actually cost the employer?
Total employer cost is gross pay plus the employer's 11% pension contribution on basic salary. For a 20,000 ETB basic salary, that's 22,200 ETB per month before any other benefits.
More free tools
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- Bonus tax calculator — How much of a bonus survives income tax when it lands on top of a salary.
- Severance calculator — Severance by reason and length of service, with estimated tax and net pay.
- Leave Pay calculator — Unused annual leave and pay in lieu of notice on termination, with tax and net.
- Loan calculator — Monthly payment, total interest and the full amortization schedule.
- Ethiopian calendar converter — Ethiopian ↔ Gregorian dates, today's date, working days between dates and the full year.
- Compliance self-check — Six questions that show where your payroll is exposed.