Ghana Parliament approves tax relief for minimum wage earners

Ghana’s Parliament has approved the Income Tax (Amendment) Bill, 2026, which exempts the National Daily Minimum Wage from income tax and introduces measures designed to simplify tax compliance for micro and small businesses.

The amendment modifies provisions of the Income Tax Act, 2015 (Act 896), including changes to personal income tax rates, the exemption of minimum wage earnings from taxation, and an increase in the income threshold for businesses eligible under the presumptive tax system.

The Bill was presented to Parliament on July 23, 2026, on behalf of the Minister for Finance by the Minister for Roads and Highways, Kwame Governs Agbodza, before being referred to the Finance Committee for consideration.

In its report, the Finance Committee said exempting the National Daily Minimum Wage from income tax would provide additional relief to low-income workers by allowing them to retain a larger share of their earnings.

“The Committee observed that exempting the National Daily Minimum Wage from income tax would provide meaningful tax relief to low-income earners and enhance the progressivity of Ghana’s personal income tax system,” the committee stated.

According to the committee, the measure would also reduce the risk of workers being moved into higher tax brackets as wages rise in response to inflation, without experiencing a corresponding increase in their real purchasing power.

The amendment further increases the income threshold for businesses eligible to use the presumptive tax system from GH¢200,000 to GH¢750,000.

The revised threshold aligns the presumptive tax limit with the Value Added Tax (VAT) registration threshold, addressing what the Finance Committee described as an administrative gap between the two systems.

The committee said the previous disparity between the income limits created difficulties for tax administration and increased the compliance burden for small businesses.

Under the simplified presumptive tax regime, eligible businesses can be assessed based on income rather than undertaking detailed profit calculations, potentially reducing the administrative requirements associated with tax compliance.

The Finance Committee said raising the threshold would enable more micro and small enterprises to benefit from the simplified system while lowering compliance costs.

It added that the measure could also encourage more businesses to formally register within the tax system and improve overall tax administration.

The amendments reflect efforts to strengthen Ghana’s tax framework by combining targeted tax relief for low-income earners with simpler compliance requirements for smaller businesses, while broadening participation in the formal tax system.