Nepal Salary Tax Guide 2025/2026
For the Fiscal Year 2082/83
Salary Tax Calculator (FY 2082/83)
Enter your income and deductions to estimate your tax liability.
Deductions (Annual)
What is Salary Tax in Nepal?
Salary tax in Nepal is a direct tax levied on the income earned by individuals from employment, including salaries, wages, bonuses, and other employment benefits. The tax system operates under the Income Tax Act 2058 (2002) and is administered by the Inland Revenue Department (IRD) of Nepal. The government uses a progressive tax system, meaning higher income levels are taxed at higher rates, ensuring fair contribution based on earning capacity.
Current Tax Slabs for FY 2082/83
Tax Slabs for Individuals (Unmarried)
| Annual Income (NPR) | Tax Rate | Tax Calculation |
|---|---|---|
| Up to 500,000 | 1% | 1% of total income |
| 500,001 – 700,000 | 10% | 5,000 + 10% of amount above 500,000 |
| 700,001 – 1,000,000 | 20% | 25,000 + 20% of amount above 700,000 |
| 1,000,001 – 2,000,000 | 30% | 85,000 + 30% of amount above 1,000,000 |
| 2,000,001 – 5,000,000 | 36% | 385,000 + 36% of amount above 2,000,000 |
| Above 5,000,000 | 39% | 1,465,000 + 39% of amount above 5,000,000 |
Tax Slabs for Married Couples
| Annual Income (NPR) | Tax Rate | Tax Calculation |
|---|---|---|
| Up to 600,000 | 1% | 1% of total income |
| 600,001 – 800,000 | 10% | 6,000 + 10% of amount above 600,000 |
| 800,001 – 1,100,000 | 20% | 26,000 + 20% of amount above 800,000 |
| 1,100,001 – 2,100,000 | 30% | 86,000 + 30% of amount above 1,100,000 |
| 2,100,001 – 5,100,000 | 36% | 386,000 + 36% of amount above 2,100,000 |
| Above 5,100,000 | 39% | 1,466,000 + 39% of amount above 5,100,000 |
How to Calculate Salary Tax in Nepal
Using a Nepal salary tax calculator simplifies the process, but understanding the manual calculation helps ensure accuracy.
- Determine Gross Annual Income: Calculate your total annual income by multiplying your monthly salary by 12 and adding any bonuses, allowances, or additional earnings.
- Identify Taxable Income: Not all income is taxable. Subtract exempted amounts such as Festival allowances, Provident Fund (PF) / Social Security Fund (SSF) contributions, Citizen Investment Trust (CIT) contributions, and Insurance premiums.
- Apply Appropriate Tax Slab: Based on your marital status and taxable income, apply the relevant tax slab from the tables above.
- Calculate Final Tax Liability: Use the progressive tax calculation method where different portions of your income are taxed at different rates.
Key Deductions and Exemptions
Maximizing your deductions can significantly reduce your tax liability. Here are the main deductions available:
Mandatory Deductions
- Social Security Fund (SSF): 11% of basic salary contributed by employee.
- Provident Fund (PF): Employee’s contribution to PF.
- Citizen Investment Trust (CIT): Up to NPR 300,000 annually.
Optional Deductions
- Life Insurance Premium: Up to NPR 40,000 per year.
- Medical Expenses: For elderly parents (subject to conditions).
- Remote Area Allowance: Additional deduction up to NPR 50,000 for those working in remote areas.
Common Mistakes to Avoid
- Not declaring all investments: Many taxpayers forget to declare all eligible deductions, resulting in higher tax payments.
- Incorrect marital status: Tax slabs differ significantly for married vs. unmarried individuals.
- Missing remote area allowance: If working in remote areas, ensure to claim this additional deduction.
- Late filing: Penalties apply for late submission of tax returns.
- Not reconciling TDS: Ensure the TDS deducted by employer matches your calculation.