Introduction
If you’re earning a salary in Sri Lanka, one of the most common questions is:
“How much of my salary goes to tax?”
With PAYE (Pay-As-You-Earn) tax back in effect and updated tax slabs introduced in recent years, understanding your monthly and annual tax deductions is more important than ever.
In this article, we’ll explain:
- The 2025 income tax brackets
- How PAYE is calculated
- What your take-home pay looks like
- A tool you can use to calculate it instantly
🔍 What Is PAYE in Sri Lanka?
PAYE (Pay-As-You-Earn) is the system used to collect income tax directly from salaries. Employers deduct the tax and send it to the IRD (Inland Revenue Department) every month.
💰 2025 Tax Rates for Employment Income (Monthly)
| Monthly Income Range (LKR) | Tax Rate |
|---|---|
| 0 – 100,000 | 0% |
| 100,001 – 141,667 | 6% |
| 141,668 – 183,333 | 12% |
| 183,334 – 225,000 | 18% |
| 225,001 – 266,667 | 24% |
| 266,668 – 308,333 | 30% |
| Above 308,334 | 36% |
✅ Tip: These brackets are progressive, meaning only the income within each range is taxed at that rate.
📊 Example: Salary Tax Calculation
If your monthly salary is LKR 250,000, here’s how PAYE is calculated:
- 0 – 100,000 → 0% = 0
- 100,001 – 141,667 → 6% = 2,500
- 141,668 – 183,333 → 12% = 5,000
- 183,334 – 225,000 → 18% = 7,500
- 225,001 – 250,000 → 24% = 6,000
➡ Total Tax = Rs. 21,000
So your net salary = Rs. 229,000
⚙️ Use an Online Tax Calculator
Instead of manual calculation, you can use www.TaxCalculator.lk to:
- Instantly check your PAYE deduction
- Compare pre- and post-tax salary
- Explore refund and savings options
🤔 FAQs
1. Do I have to file a tax return if PAYE is deducted?
Yes, individuals with income above the threshold must file an annual tax return even if PAYE is deducted.
2. Can I claim tax refunds?
Yes. Overpayments (e.g., due to bonuses, multiple jobs) may be refunded.
✅ Final Thoughts
Understanding your salary tax is not just about compliance – it’s about planning better, saving smarter, and avoiding surprises during tax season.
💡 Use tools like TaxCalculator.lk to stay informed, and contact a tax advisor if you’re unsure.
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