Nepal Budget 2083/84: Personal Income Tax Threshold Raised to Rs 10 Lakh, Maximum Rate Cut to 29%

In a significant move aimed at providing relief to taxpayers, the government of Nepal has revised the personal income tax structure for the upcoming fiscal year 2083/84 (2026/27). Presenting the annual budget during a joint session of the federal parliament, Finance Minister Dr. Swarnim Wagle announced a substantial increase in the minimum income tax exemption threshold, alongside a reduction in the maximum tax bracket.

Under the newly proposed budget, the minimum tax-exempt income limit for individuals has been raised to Rs 1 million (10 Lakhs) per annum. This upward revision means that individuals earning up to this threshold will be exempted from basic income tax, a decision expected to directly benefit middle-income earners and boost disposable income across the country.

In tandem with raising the exemption floor, the government has also introduced a major reform at the higher end of the tax spectrum. Finance Minister Dr. Wagle announced that the maximum income tax rate, which currently stands at 39 percent, will be slashed by 10 percentage points. With this reduction, the highest income tax rate in Nepal will be capped at 29 percent for the upcoming fiscal year, a strategic shift intended to foster a more competitive financial environment and encourage tax compliance