The GRA has announced amended income tax bands effective September 1, 2026, alongside a revised turnover threshold for the Modified Taxation Scheme. Ferdinand Ellis explains what the changes mean for workers and eligible business operators.
By Ferdinand Ellis
Education Blogger | Curriculum Specialist | Researcher | Policy Analyst
Article Information
| Field | Details |
|---|---|
| Publication | EducateGhana.com |
| Category | News / Taxation / Public Policy |
| Date | October 29, 2026 |
| Article Type | Official Tax Update and Economic Explainer |
| Primary Topic | Income Tax (Amendment) Act, 2026 (Act 1178) |
| Issuing Institution | Ghana Revenue Authority (GRA) |
| Effective Date | September 1, 2026 |
| Target Audience | Workers, self-employed persons, partnerships, businesses and employers |
In Brief
The Ghana Revenue Authority (GRA) has announced amendments to income tax rates following the passage of the Income Tax (Amendment) Act, 2026 (Act 1178), with implementation effective September 1, 2026.
The official notice provides revised monthly and annual income tax bands for individuals and increases the turnover threshold for the Modified Taxation Scheme (MTS).
Under the revised individual income tax schedule, the first GH¢588 of monthly chargeable income falls within the zero-rate band. The next GH¢80 is taxed at 5%, the next GH¢100 at 10%, and subsequent portions fall within progressively higher tax bands, reaching 35% on the portion exceeding GH¢50,000 per month.
For eligible individuals under the Modified Taxation Scheme, annual business turnover exceeding GH¢20,000 but not exceeding GH¢750,000 is subject to a presumptive tax of 3% of annual business turnover, according to the GRA notice.
These changes are important because income tax affects take-home pay, business cash flow and the amount taxpayers are required to remit to the state.
Key Takeaways
- Effective date: September 1, 2026.
- Legal basis: Income Tax (Amendment) Act, 2026 (Act 1178).
- Monthly zero-rate band: First GH¢588 of chargeable income.
- Highest individual marginal rate: 35% on the portion of monthly chargeable income exceeding GH¢50,000.
- Modified Taxation Scheme: Eligible individuals with annual business turnover above GH¢20,000 and up to GH¢750,000 are subject to a presumptive tax of 3% of annual turnover.
- Important distinction: The individual income tax schedule and the Modified Taxation Scheme apply different methods of calculating tax.
- Taxpayer guidance: Workers and business operators should confirm how the amended provisions apply to their particular circumstances with the GRA or a qualified tax professional.
GRA Announces Amendments to Income Tax Rates
The Ghana Revenue Authority has issued a public notice announcing changes to income tax rates following the passage of the Income Tax (Amendment) Act, 2026 (Act 1178).
The notice, issued by the GRA’s Domestic Tax Revenue Division, is addressed to the general public, with particular attention to companies, entities, individuals, self-employed persons and partnerships.
The stated effective date is September 1, 2026.
The announcement covers two main areas: the revised monthly and annual income tax bands for individuals, and an increase in the turnover threshold applicable to the Modified Taxation Scheme.
For workers, the revised tax bands are relevant to how chargeable income is taxed. For eligible self-employed people and small-business operators, the Modified Taxation Scheme provides a separate approach based on annual business turnover.
Understanding which system applies is important because the two methods do not calculate tax in the same way.
Understanding the New Monthly Income Tax Bands
The GRA notice provides the following monthly income tax schedule for the 2026 year of assessment.
| Monthly chargeable income band | Amount in band (GH¢) | Tax rate |
|---|---|---|
| First band | 588 | 0% |
| Next band | 80 | 5% |
| Next band | 100 | 10% |
| Next band | 2,900 | 17.5% |
| Next band | 16,000 | 25% |
| Next band | 30,332 | 30% |
| Portion exceeding GH¢50,000 | Exceeding 50,000 | 35% |
The schedule uses progressive taxation. This means that different portions of an individual’s chargeable income are taxed at different rates.
The highest rate of 35% does not automatically apply to the entire salary of every person whose income exceeds GH¢50,000. It applies to the portion of chargeable income falling within that highest band.
This distinction is essential when interpreting a progressive tax schedule.
What does progressive taxation mean in practice?
Suppose an individual’s monthly chargeable income is GH¢1,000.
Using the bands in the GRA notice:
- The first GH¢588 falls within the zero-rate band.
- The next GH¢80 is taxed at 5%, producing GH¢4 in tax.
- The remaining GH¢332 falls within the 10% band only up to GH¢100, with the balance falling into the next 17.5% band.
The tax calculation is therefore:
| Component | Calculation | Tax (GH¢) |
|---|---|---|
| First GH¢588 | GH¢588 × 0% | 0.00 |
| Next GH¢80 | GH¢80 × 5% | 4.00 |
| Next GH¢100 | GH¢100 × 10% | 10.00 |
| Remaining GH¢232 | GH¢232 × 17.5% | 40.60 |
| Total illustrative tax | 54.60 |
On these assumptions, the tax on GH¢1,000 in monthly chargeable income is GH¢54.60.
This is an illustration of the supplied bands, not a complete payroll calculation. Actual tax treatment depends on the applicable law, the correct definition of chargeable income and any relevant reliefs or other statutory provisions.
What Is Chargeable Income?
Chargeable income is the amount on which income tax is calculated after applying the relevant rules under tax law.
It should not automatically be equated with gross salary or the final amount received in a worker’s bank account.
A worker’s gross employment income may be subject to applicable statutory deductions, exemptions, reliefs and other rules before the chargeable amount is established.
The correct tax calculation therefore depends on the worker’s circumstances and the applicable legal provisions.
Employees should consult their payslips and seek clarification from their employer’s payroll unit or the GRA if they need to understand how the revised schedule affects their monthly deductions.
Annual Income Tax Bands for 2026
The GRA notice also provides annual equivalents of the individual income tax bands.
| Annual chargeable income band | Amount in band (GH¢) | Tax rate |
|---|---|---|
| First band | 7,056 | 0% |
| Next band | 960 | 5% |
| Next band | 1,200 | 10% |
| Next band | 34,800 | 17.5% |
| Next band | 192,000 | 25% |
| Next band | 363,984 | 30% |
| Portion exceeding GH¢600,000 | Exceeding 600,000 | 35% |
The annual schedule allows taxpayers and tax professionals to assess chargeable income over a full year rather than one month at a time.
The monthly and annual schedules reflect corresponding bands in the notice. However, taxpayers should follow the applicable assessment and filing rules rather than assuming that every individual’s annual tax liability can be established simply by multiplying one month’s deductions by 12.
Changes in income, employment circumstances, reliefs and other relevant factors may affect the final annual position.
Modified Taxation Scheme: What Has Changed?
The GRA notice also announces an increase in the turnover threshold for presumptive taxation under the Modified Taxation Scheme.
According to the notice, individuals whose annual business turnover is more than GH¢20,000 but does not exceed GH¢750,000 will be subject to a presumptive tax of 3% of annual business turnover, subject to the applicable scheme requirements.
Turnover generally refers to the value of business sales or receipts over a period before deducting business expenses. It is not the same as profit.
This distinction matters because a tax calculated on turnover is based on a different amount from a tax calculated on net profit.
For eligible taxpayers under the stated presumptive arrangement, the 3% rate is applied to annual business turnover, rather than automatically being applied to the owner’s take-home income.
Example: How the 3% presumptive tax works
Suppose an eligible business operator records annual turnover of GH¢100,000.
Using the rate stated in the GRA notice:
| Item | Amount |
|---|---|
| Annual business turnover | GH¢100,000 |
| Presumptive tax rate | 3% |
| Illustrative tax | GH¢3,000 |
The calculation is GH¢100,000 × 3% = GH¢3,000.
This is an illustration of the announced rate. Eligibility, registration requirements, exclusions and any other conditions under the applicable law must still be confirmed before determining an individual taxpayer’s actual liability.
Who should pay attention to this change?
The announcement is particularly relevant to eligible self-employed individuals and small-business operators whose annual turnover falls within the stated range.
People operating businesses should keep accurate records of sales and receipts, understand which tax regime applies to them and consult the GRA if they are uncertain about their classification.
A business should not assume that it qualifies for the Modified Taxation Scheme solely because its turnover falls within the stated range. The applicable statutory conditions must also be met.
Income Tax on Salary Is Different from Presumptive Tax on Turnover
One of the most important points in the GRA announcement is that the individual income tax bands and the Modified Taxation Scheme use different calculation methods.
For individuals taxed under the progressive income tax schedule, tax is calculated by applying the relevant rates to portions of chargeable income.
Under the stated presumptive arrangement, eligible taxpayers are taxed at 3% of annual business turnover.
These are different tax bases.
A salaried worker should not automatically apply the 3% turnover tax to employment income. Similarly, a self-employed person should not assume that the progressive employee tax bands automatically determine the tax due under the Modified Taxation Scheme.
The applicable treatment depends on the nature of the income, the taxpayer’s circumstances and the relevant provisions of the law.
Where an individual has both employment income and business income, the correct treatment should be confirmed with the GRA or a qualified tax professional.
What Workers and Employers Should Do
The amended rates make it important for employees and employers to understand the tax rules applicable from September 1, 2026.
Workers should review their payslips and ask their payroll departments to explain the calculation of chargeable income and the application of the revised bands.
Employers should ensure that payroll calculations reflect the applicable legislation and implementation guidance. Where adjustments are required, they should communicate clearly with affected employees.
Self-employed individuals and eligible business operators should review their annual turnover records and determine whether the Modified Taxation Scheme applies to them.
Taxpayers who are unsure about their obligations should seek clarification before making assumptions about the tax due.
The GRA notice provides the following official contact channels:
- Email: info@gra.gov.gh
- Toll-free telephone: 0800-900-110
- WhatsApp: 055-299-0000 or 026-063-1664
- Website: www.gra.gov.gh
Conclusion
The Ghana Revenue Authority has announced amended income tax rates under the Income Tax (Amendment) Act, 2026 (Act 1178), effective September 1, 2026.
The announcement sets out revised monthly and annual income tax bands for individuals and increases the turnover threshold for the Modified Taxation Scheme, under which eligible individuals within the specified turnover range are subject to a presumptive tax of 3% of annual business turnover.
For employees, understanding progressive tax bands helps explain why different portions of chargeable income are taxed at different rates. For eligible business operators, understanding the distinction between turnover and profit is important when assessing presumptive taxation.
The practical message is straightforward: workers, employers and business operators should identify the tax rules applicable to their circumstances, maintain accurate records and seek clarification from the GRA when necessary.
Source: Ghana Revenue Authority, Domestic Tax Revenue Division, Amendments – Income Tax Act, 2026 (Act 1178). The effective date stated in the supplied notice is September 1, 2026.
About the Author
Ferdinand Ellis is an Education Blogger, Curriculum Specialist, Researcher and Policy Analyst. Through EducateGhana.com, Ghana’s Education Intelligence Platform, he explains public policy, employment issues, education developments and economic matters affecting workers and households.
