Salary & Income Tax Calculator
Enter your gross monthly salary to see your PAYE tax, EPF deduction and net take-home pay calculated against the 2026 tax bands.
How PAYE is calculated
Sri Lanka uses a progressive tax system under the Inland Revenue Act, No. 24 of 2017. Your annual gross income (salary plus any other income) is reduced by the personal relief amount of Rs. 1,800,000 (for Y/A 2025/2026) to arrive at taxable income. That taxable income is then split across bands: the first Rs. 1,000,000 is taxed at 6%, the next three Rs. 500,000 slabs at 18%, 24% and 30%, and the balance at 36%. Only the portion that falls within a band pays that rate. The annual tax is divided by 12 to give your monthly PAYE deduction.
Good to know
Tax rates and the personal relief amount are set by the Inland Revenue Act and may change each year. Results here are estimates for planning only and do not account for all possible deductions or surcharges. Confirm the current rates from the Inland Revenue Department APIT tax tables before filing a tax return.
Sources
Worked example
Take a gross monthly salary of Rs. 500,000, no other income. Annualised, that's Rs. 6,000,000. Subtract the Rs. 1,800,000 personal relief and Rs. 4,200,000 of taxable income is left to run through the bands, all the way up to the top rate:
Taxable income Rs. 4,200,000
| Band | Rate | Taxable in band | Tax |
|---|---|---|---|
| Rs. 0 – 1,000,000 | 6% | Rs. 1,000,000 | Rs. 60,000 |
| Rs. 1,000,000 – 1,500,000 | 18% | Rs. 500,000 | Rs. 90,000 |
| Rs. 1,500,000 – 2,000,000 | 24% | Rs. 500,000 | Rs. 120,000 |
| Rs. 2,000,000 – 2,500,000 | 30% | Rs. 500,000 | Rs. 150,000 |
| Above Rs. 2,500,000 | 36% | Rs. 1,700,000 | Rs. 612,000 |
| Total annual tax | — | — | Rs. 1,032,000 |
That's Rs. 86,000 a month in PAYE. With an 8% EPF deduction of Rs. 40,000, take-home pay works out to Rs. 374,000 a month, an effective tax rate of 17.2% even though the top slice of income is taxed at 36%.
Frequently asked questions
How is PAYE different from self-assessment tax?
PAYE (Pay As You Earn) is deducted monthly by your employer directly from your salary under the Inland Revenue Act, so most employees never file a return. Self-assessment applies to individuals with business, rental or other income outside employment; they must calculate their own liability and file an annual return with the IRD. If you only have one employer and no other income, PAYE is usually your final tax.
What counts as taxable employment income?
Basic salary, cost of living and fixed allowances, bonuses and commissions are all taxable. Genuine reimbursements of actual expenses backed by receipts generally aren’t, while cash allowances paid regardless of expense are. Check the current APIT tax tables for the full list your employer must include when withholding PAYE.
Does the personal relief amount change every year?
Yes. The personal relief and the tax bands are set out in the Inland Revenue Act and revised periodically by IRD notice, most recently to Rs. 1,800,000 for Y/A 2025/2026. Always check the latest IRD notice or APIT tax table before relying on a figure from a previous year.
Why is my effective tax rate lower than my highest tax band?
Your marginal rate only applies to the portion of income that falls in that band, not your whole salary. A Rs. 500,000 monthly salary reaches the 36% band, but because most of the taxable income sits in the lower 6-30% bands, the effective rate works out to just 17.2%. This is why a raise that pushes you into a higher band rarely changes your overall tax bill by as much as the band rate suggests.
Want the full breakdown? Read Sri Lanka's 2025/26 PAYE bands: what they actually mean for your salary →