Salary Income Tax Calculation in Ethiopia, Payroll Net Pay, Pension, Cost Sharing Calculator with Examples

Here are the formulas on how to calculate personal (employee) income tax, pension, gross and net income in Ethiopia.

Salary Income Tax = (Gross Salary * Tax Rate) – Deduction

Employee Pension – Gross Salary x 7%

Net Income = Gross Salary – Salary Income Tax – Employee Pension – Other Taxes (If applicable)

Employee Pension – 7%

Company Pension – 11%

Sample Calculation

If the salary of an employee is 2,000 Birr.

By referring to the above table, we can see that 2,000 birr falls in the No. 4 row. So, Tax Rate = 15% and deduction = 142.50

Income Tax = (2,000 Birr x 15%) – 142.50 Birr

Income Tax = 300 Birr – 142.50 = 157.50 Birr

Employee Pension = 2,000 Birr x 7% = 140 Birr

Employee Net Income = 2,000 Birr – 157.50 – 140 = 1702.50 Birr

Net Income = 1,702.50 Birr