Malawi New Tax Brackets for 2026

Effective January 1, 2026, the Government of Malawi has implemented significant reforms to the Pay As You Earn system following the 2025/26 Mid-Year Budget Review. These changes, enacted through the Taxation (Amendment) Act No. 36 of 2025, aim to provide relief to low-income earners while increasing the tax contribution from the country's highest earners.

The New Monthly PAYE Structure

Below are the updated monthly tax rates:

Monthly Taxable Income

Tax Rate

Monthly Taxable Income	Tax Rate
First K170,000	0% (Tax-Free)
K170,001 - K1,570,000	30%
K1,570,001 - K10,000,000	35%
Above K10,000,000	40%

Key Highlights of the Reform

Increased Tax-Free Threshold: The zero-rate bracket has been raised from K150,000 to K170,000 per month. This measure is specifically designed to cushion low-wage earners against the rising cost of living.
Reintroduction of the 40% Rate: A new top marginal rate of 40% now applies to individuals earning more than K10 million per month (or K120 million annually). This marks a shift back to higher taxation for top-tier earners to strengthen domestic revenue mobilization.

Employers are advised to update their systems immediately to reflect these statutory changes and ensure compliance with the Malawi Revenue Authority (MRA).
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Malawi 2026 Tax Brackets FAQs

Q: When does the new PAYE system go into effect in Malawi?A: The significant reforms to the Pay As You Earn (PAYE) system are effective January 1, 2026.

Q: What are the goals of this tax reform?A: The changes aim to provide relief to low-income earners against the rising cost of living while increasing tax contributions from high earners to strengthen domestic revenue mobilization.

Q: What is the new tax-free income threshold?A: The zero-rate bracket has been increased from K150,000 to K170,000 per month. This means the first K170,000 of monthly taxable income is taxed at 0%.

Q: Have tax rates increased for high income earners?A: Yes. A new top marginal rate of 40% has been reintroduced for individuals earning more than K10 million per month. Income between K1,570,001 and K10,000,000 is taxed at 35%.

Q: What are the new monthly tax brackets for 2026?A: The updated monthly tax rates are:

Monthly Taxable Income (MWK)	Tax Rate
First K170,000	0%
K170,001 – K1,570,000	30%
K1,570,001 – K10,000,000	35%
Above K10,000,000	40%

Q: What should employers do to prepare for these changes?A: Employers are advised to update their systems immediately to reflect these statutory changes and ensure compliance with the Malawi Revenue Authority (MRA).

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