Salary Tax in Nepal: Tax Slabs, Rates & Calculation Guide

Salary tax is the tax that is taken from your monthly salary in Nepal. Every person who earns a regular income needs to pay this tax. In 2026, the government has set new tax slabs and rules, which makes it important to understand how salary tax works. When you know how much tax is deducted from your salary, you can plan your expenses better and avoid confusion or stress later. This guide explains salary tax in Nepal using very simple words, so anyone can understand how tax is calculated and why it is deducted.

This guide is for people in Nepal who earn a salary, such as office workers, company employees, NGO staff, and government workers. It is useful for those who have just started a job as well as for people who are already working. By reading this guide, you will understand how tax is cut from your salary every month, what basic deductions are allowed, and how your employer pays tax to the government for you. This will help you feel clear and confident about your salary tax.

Table of Contents

• Salary Tax Slabs and Rates in Nepal
• Basic Rules of Salary Tax in Nepal
• Salary Tax Rates for Unmarried Individuals
• Salary Tax Rates for Married Individuals
• Salary Tax Rates for Non-Resident Individuals in Nepal
• Gross Salary, and Allowances
• What Is Gross Salary in Nepal
• Common Tax-Free Allowances in Nepal
• What Is Taxable Income
• Tax Deductions That Help You Save Money
• PF, CIT, and SSF Contributions
• Life and Health Insurance Premiums
• Other Tax Deductions You Should Know
• How to Calculate Salary Tax in Nepal
• Step 1: Calculate Your Annual Gross Salary
• Step 2: Subtract Tax-Free Allowances and Deductions
• Step 3: Apply the 2026 Salary Tax Slabs
• Step 4: Calculate Social Security Tax (SST)
• Step 5: Check Tax Deducted at Source (TDS)
• Step 6: Find Your Net Salary (Take-Home Pay)
• Important Points for Salary Taxpayers in Nepal
• Marital Status and Tax Slabs
• Employer and Salary Tax Deduction
• Penalties and Tax Compliance
• Future Changes in Tax Rules
• Conclusion

Salary Tax Slabs and Rates in Nepal 

Basic Rules of Salary Tax in Nepal

In Nepal, salary tax is calculated for the whole year but deducted every month from your salary by your employer. This monthly deduction is known as Tax Deducted at Source (TDS). Your employer estimates your yearly income, subtracts allowed deductions, and then applies the tax slabs set by the government. Marital status and residency also matter because tax rates and slab limits are different for unmarried, married, and non-resident individuals. Understanding these basic rules helps you know why a certain amount of tax is cut from your salary each month and whether it is correct.

Salary Tax Rates for Unmarried Individuals 

Unmarried resident individuals in Nepal are taxed using a progressive tax system, which means higher income is taxed at higher rates. For 2026, income up to NPR 500,000 is charged only 1% as Social Security Tax. Income from NPR 500,001 to 700,000 is taxed at 10%, from NPR 700,001 to 1,000,000 at 20%, from NPR 1,000,001 to 2,000,000 at 30%, and income above NPR 2,000,000 is taxed at 36%. This system reduces tax pressure on low-income earners while collecting more tax from higher earners.

Salary Tax Rates for Married Individuals 

Married resident individuals receive higher income limits before moving into higher tax slabs. For 2026, income up to NPR 600,000 is charged 1% as Social Security Tax. Income from NPR 600,001 to 800,000 is taxed at 10%, from NPR 800,001 to 1,100,000 at 20%, from NPR 1,100,001 to 2,000,000 at 30%, and income above NPR 2,000,000 is taxed at 36%. Even though slab limits are higher, each spouse is taxed separately on their own salary, which helps families keep more of their income.

Salary Tax Rates for Non-Resident Individuals in Nepal

Non-resident individuals earning a salary in Nepal are taxed at a flat rate instead of progressive slabs. For 2026, non-residents generally pay a flat tax rate of 25% on their total taxable salary income. They do not receive benefits such as lower slabs or most deductions available to residents. Because of this, residency status plays a very important role in determining total tax payable, and non-resident workers usually pay higher tax compared to residents.

Gross Salary, and Allowances

What Is Gross Salary in Nepal

Gross salary is the total amount of money you earn from your job before any tax or deductions are applied. In Nepal, gross salary includes your basic salary, monthly allowances, bonuses, overtime pay, and any other benefits provided by your employer during the year. This amount is used as the starting point for calculating salary tax. Unless the law clearly says a payment is tax-free, it is usually added to your gross income. Understanding your gross salary helps you know how your tax calculation begins.

Common Tax-Free Allowances in Nepal

Some allowances provided to salaried employees in Nepal are fully or partly tax-free. These may include certain travel allowances, uniform allowances, medical support, or other benefits approved by the government. These tax-free allowances reduce the amount of income on which tax is charged. When your employer correctly separates tax-free allowances from taxable income, your monthly take-home salary increases. Knowing which allowances are exempt helps you legally lower your salary tax.

What Is Taxable Income

Taxable income is the amount of salary on which tax is actually calculated. It is found after subtracting tax-exempt allowances and allowed deductions from your gross salary. This final amount is then used to apply salary tax slabs and rates. Many employees think tax is charged on their full salary, which is not true. Understanding the difference between gross salary and taxable income helps you clearly see how much tax you should pay and avoids confusion when checking your payslip.

Tax Deductions That Help You Save Money

PF, CIT, and SSF Contributions

Provident Fund (PF), Citizen Investment Trust (CIT), and Social Security Fund (SSF) are common savings plans for salaried people in Nepal. A small amount is taken from your salary every month and saved in these funds. The good part is that this amount is not counted as taxable income, so it helps reduce your salary tax. At the same time, these funds help you save money for the future, such as retirement or emergencies. There is a yearly limit on how much you can claim, so understanding these limits helps you get the maximum tax benefit.

Life and Health Insurance Premiums

Money paid for life insurance and health insurance can also reduce your salary tax in Nepal. When you pay insurance premiums, the government allows you to subtract a certain amount from your taxable income. This means you pay less tax while keeping yourself and your family protected. Life insurance gives financial support to your family, and health insurance helps cover medical expenses. Always keep your insurance payment receipts safe, as they are needed to claim this tax benefit.

Other Tax Deductions You Should Know

Some salaried employees in Nepal may get extra tax deductions depending on their job or location. For example, people working in remote or difficult areas may receive special tax benefits. There are also some government-approved investments that can help reduce tax. These benefits may not apply to everyone, but when they do, they can lower your tax amount a lot. Knowing about all possible deductions helps you avoid paying more tax than required and keeps your salary tax simple and clear.

How to Calculate Salary Tax in Nepal 

Step 1: Calculate Your Annual Gross Salary

First, calculate how much you earn in one year. Add your basic monthly salary, allowances, bonuses, and any extra payments from your employer.
Example: If your monthly salary is NPR 50,000 and you receive NPR 100,000 as yearly bonus, your annual gross salary will be:
NPR 50,000 × 12 = NPR 600,000 + NPR 100,000 = NPR 700,000.
This total amount is your gross salary and is the starting point for tax calculation.

Step 2: Subtract Tax-Free Allowances and Deductions

Next, subtract all allowed deductions from your gross salary. This includes PF, CIT, SSF, and insurance premiums.
Example: If you contribute NPR 40,000 to PF and NPR 20,000 to life insurance in a year, total deductions are NPR 60,000.
So, your taxable income becomes:
NPR 700,000 − NPR 60,000 = NPR 640,000.

Step 3: Apply the 2026 Salary Tax Slabs

Now, apply the salary tax slabs to your taxable income. Each part of income is taxed at a different rate.
Example (Unmarried individual):

First NPR 500,000 → 1% SST = NPR 5,000
Remaining NPR 140,000 → 10% = NPR 14,000
Total income tax = NPR 19,000.

Step 4: Calculate Social Security Tax (SST)

Social Security Tax is mandatory and is usually included in the first slab. It is deducted every month along with salary tax.
Example: For income up to NPR 500,000, SST at 1% equals NPR 5,000 per year, or about NPR 417 per month.

Step 5: Check Tax Deducted at Source (TDS)

Your employer deducts tax monthly as TDS based on your yearly income estimate.
Example: If your total yearly tax is NPR 19,000, your employer may deduct around NPR 1,580 per month. Always check your payslip to make sure the deducted amount is correct.

Step 6: Find Your Net Salary (Take-Home Pay)

Finally, subtract total tax from your gross salary to find your take-home income.
Example:
Annual gross salary = NPR 700,000
Total tax = NPR 19,000
Net yearly salary = NPR 681,000, which is about NPR 56,750 per month.

This step-by-step method helps you clearly understand how salary tax in Nepal is calculated and how much you actually take home.

Important Points for Salary Taxpayers in Nepal

Marital Status and Tax Slabs

Your marital status directly affects how your salary tax is calculated in Nepal. Married individuals receive higher tax slab limits than unmarried individuals, which means a larger portion of income is taxed at lower rates. If you get married or your marital status changes, you should inform your employer as soon as possible. When your status is not updated correctly, your tax may be deducted using the wrong slab, which can lead to paying extra tax or facing adjustments later.

Employer and Salary Tax Deduction

In Nepal, employers play a key role in salary tax management. They calculate your yearly income, apply tax slabs, and deduct tax every month as Tax Deducted at Source (TDS). Employers also deposit this tax with the government on your behalf. However, this does not mean employees should ignore their tax details. You should regularly review your payslip to check income, deductions, and tax amounts to ensure everything is accurate.

Penalties and Tax Compliance

Not paying the correct amount of tax or delaying tax payments can result in penalties in Nepal. This may include fines and interest charges, which increase your overall tax liability. Errors can happen due to incorrect income details or missing deductions. Staying informed, checking payslips, and understanding basic tax rules can help you avoid these unnecessary penalties and remain compliant.

Future Changes in Tax Rules

Salary tax rules in Nepal are reviewed and updated every year through the national budget. Tax rates, slabs, and deductions may change depending on government policies. Keeping track of budget announcements helps you stay prepared for future changes. Being aware of new rules allows you to plan your income and savings better and avoid surprises in upcoming tax years.

Conclusion

Understanding salary tax in Nepal makes managing your income much easier and clearer. When you know how salary tax slabs work, what deductions are allowed, and how tax is calculated, you can better plan your monthly expenses and savings. This knowledge helps you avoid confusion, reduce unnecessary tax stress, and make sure the correct tax is deducted from your salary. By staying informed about salary tax rules, you can handle your income with confidence and remain fully compliant with Nepal’s tax system.