The Quick Answer: It Depends on Your Income Band

For the 2025/26 tax year (effective 1 April 2025), Sri Lanka uses a progressive system with personal relief of LKR 1,800,000 per year, and six rate bands from 0% to 36% applied to income above that threshold.

The Current Tax Bands

• LKR 0 – 1,800,000: 0% (personal relief)
• Next LKR 1,000,000 (up to 2,800,000): 6%
• Next LKR 500,000 (up to 3,300,000): 18%
• Next LKR 500,000 (up to 3,800,000): 24%
• Next LKR 500,000 (up to 4,300,000): 30%
• Above LKR 4,300,000: 36%

These are marginal rates — each band is taxed at its own rate, not your entire income at the highest rate you reach.

Worked Example: LKR 250,000/Month Salary

Annual gross: LKR 3,000,000. After LKR 1,800,000 personal relief, taxable income is LKR 1,200,000. The first LKR 1,000,000 of that is taxed at 6% (LKR 60,000), and the remaining LKR 200,000 at 18% (LKR 36,000) — a total annual tax of roughly LKR 96,000, or about LKR 8,000/month, before EPF adjustments.

Worked Example: LKR 500,000/Month Salary

Annual gross: LKR 6,000,000. Taxable income after relief: LKR 4,200,000. Working through each band gives a total annual tax considerably higher, landing mostly in the 24–30% marginal bands — a full calculator run is the fastest way to get the exact figure once EPF and any other deductions are factored in.

Why “Rules of Thumb” Are Risky Now

If you’re estimating based on what you paid last year, or what a friend told you, be careful — the personal relief nearly doubled (from LKR 1,200,000) and the old 12% band was removed entirely, effective April 2025. Numbers from before that date are no longer accurate.

Don’t Forget Non-Salary Income

If you have freelance income, rental income, or dividends alongside your salary, all of it combines toward the same personal relief and band structure — it’s not calculated separately per income source.

Get an Exact Number

Rules of thumb get you in the right range, but for a precise figure — accounting for EPF, qualifying payments, and any foreign-currency concessions — use our free Sri Lanka Income Tax Calculator. Just enter your monthly income and get an instant, IRD-accurate breakdown.