Methodology - Ethiopia (2026)

Educational model - not a Ministry of Revenue assessment, not a tax return, not tax advice. Currency ETB.

Employee (income tax + pension)

Employment income tax monthly schedule (Income Tax (Amendment) Proclamation No. 1395/2025, effective July 2025): 0% up to ETB 2,000; 15% to 4,000; 20% to 7,000; 25% to 10,000; 30% to 14,000; 35% above 14,000. The reform raised the tax-free threshold from ETB 600 to 2,000 and removed the old 10% band.
Income tax is on gross taxable employment income - there are no standard deductions, no personal allowances, and the employee pension is not subtracted before the schedule.
Pension (Private Organization Employees Pension): employee 7% + employer 11% of basic salary, mandatory for Ethiopian citizens. The calculator treats the entered monthly salary as basic salary.
Out of scope: the basic-vs-gross split when allowances/overtime are present, fringe-benefit tax, and the exemption for non-citizen employees.

Business income is taxed on the same rate structure as employment, on annual net profit (band boundaries = the monthly boundaries x 12): 0% to 24,000; 15% to 48,000; 20% to 84,000; 25% to 120,000; 30% to 168,000; 35% above. Business income is the schedule where expense deductions are allowed.
A Minimum Alternative Tax (MAT) of 2.5% of annual turnover applies if the computed income tax is below that floor.
Out of scope: Category A vs B bookkeeping rules and VAT. The old presumptive Category C regime was abolished by the 2024/2025 reform. Self-employed are not in the mandatory pension scheme.