The Income Tax (Amendment) Act, 2026 (Act 1178), which came into effect on August 26, 2026, amends the Income Tax Act, 2015 (Act 896). The new Act provides targeted relief to individual taxpayers and broadens access to Ghana's presumptive tax regime for small businesses. According to Finance, Supply Chain, and Total Rewards Professional, Goodnews Dzramedo, the Act aims to improve disposable income, reduce compliance pressure for qualifying SMEs, and support a simpler tax administration framework.
One of the key changes in the Act is the increase in the annual tax-free threshold for resident individuals from GH¢5,880 to GH¢7,056. This represents a 20% increase, providing relief to all resident individual taxpayers. Additionally, the presumptive tax turnover threshold has been raised from GH¢500,000 to GH¢750,000, allowing more small businesses to qualify for the 3% presumptive tax regime. This change is expected to bring more small businesses within the simplified tax regime, reducing administrative requirements and compliance pressure.
The updated annual chargeable income bands for resident individuals are as follows: the first GH¢7,056 is tax-free, the next GH¢960 is taxed at 5%, the next GH¢1,200 at 10%, the next GH¢34,800 at 17.5%, the next GH¢192,000 at 25%, the next GH¢363,984 at 30%, and any amount exceeding GH¢600,000 is taxed at 35%. The Act also removes minimum wage earners from the personal income tax net, aligning the threshold with the 2026 National Daily Minimum Wage of GH¢21.77.
The increased tax-free threshold and revised tax bands are expected to benefit different categories of taxpayers. Low-income earners, who earn up to GH¢7,056 per annum, will be removed from the tax net, while lower-middle-income earners (GH¢7,057 – GH¢50,000 p.a.) will achieve net savings. For example, an employee with an annual chargeable income of GH¢40,000 will save approximately GH¢250 under the revised structure.
Middle to upper-middle-income earners (GH¢50,001 – GH¢600,000 p.a.) will also benefit from the changes, with estimated annual savings of GH¢300 to GH¢600. However, high-income earners (above GH¢600,000 p.a.) will not benefit from any changes, as the top marginal tax rate of 35% remains unchanged. The presumptive tax regime has also been amended, with the turnover threshold increased to GH¢750,000, allowing more small businesses to qualify for the 3% tax regime.
Under the presumptive tax regime, small businesses with annual turnover above GH¢20,000 but not exceeding GH¢750,000 will be subject to tax at 3% of turnover on a modified cash basis. This change is expected to make tax compliance easier for many small business operators. To calculate the 3% tax, businesses will add up their annual sales, multiply the amount by 3, and divide the result by 100.
The Ghana Revenue Authority's Modified Taxation Scheme provides for a simplified tax regime for small businesses. Businesses with average annual turnover not exceeding GH¢20,000 over three consecutive years will be assessed under the instalment-based presumptive tax framework. The new Act is expected to provide relief to individual taxpayers and small businesses, improving disposable income and reducing compliance pressure.
Key points
- The tax-free threshold for resident individuals has been increased by 20% to GH¢7,056.
- The presumptive tax turnover threshold has been raised from GH¢500,000 to GH¢750,000.
- The top marginal tax rate remains unchanged at 35% for annual income above GH¢600,000.
