How Deductions Are Calculated

This guide explains how each payroll deduction is worked out, step by step.

Payroll Variables

Standard Rates

• Income Tax Threshold = $1,902,360.00 (annually)
• Tax-Free Monthly Equivalent = $158,530.00

Employee Rates

• NIS Rate = 3% (employee portion)
• NHT Rate = 2%
• EDTAX Rate = 2.25%
• PAYE Rate = 25%
• Additional PAYE (SixMilPAYE) Rate = 30%

PAYE Tier Trigger Points:

• Annual: $6,000,000
• Monthly: $500,000
• Fortnightly: $250,000
• Weekly: $150,000

Income Tax (PAYE)

How PAYE is calculated:

• If your annual salary is below the threshold ($1,799,376): PAYE = $0
• If it’s over $6,000,000:
  • PAYE = (First 6M − Threshold) × 25% + (Amount over 6M) × 30%
• Otherwise:
  • PAYE = (Gross − Threshold − NIS − Pension) × 25%

National Insurance Scheme (NIS)

Effective April 2022, the maximum insurable wage is $5,000,000 annually.

At a 6% combined contribution rate (3% employee + 3% employer), the maximum contribution is $270,000 per year.

Contribution Logic:

• If Annual Gross Salary > $5,000,000:
  • NIS = Capped amount based on frequency:
    • Weekly: $2,884.62
    • Fortnightly: $5,769.24
    • Monthly: $12,500.00
• Else:
  • NIS = Gross Salary × 3%

National Housing Trust (NHT)

Employee:

• NHT = Gross Salary × 2%

Self-Employed:

• NHT = Gross Salary × 2%

Education Tax (ED Tax)

Employee:

• If Pension = 0:
  EDTAX = (Gross Salary − NIS) × 2.25%
• Else:
  EDTAX = (Gross Salary − NIS − Pension) × 2.25%

Self-Employed:

• Same formula as above applies.

JM Salary Calculator Comparison Table

This table is for illustrative purposes only. Actual deductions may vary based on individual circumstances.