Effective January 1, 2025, the Income Tax (Amendment) Act No. 2 of 2025 amends the personal income tax allowance and provides for additional non-taxable deductions for employed and self-employed individuals.

INCOME TAX RATES:

Section 36 of the Income Tax Act has been amended to reduce the personal income tax rate from twenty-eight percent (28%) per annum to twenty-five percent (25%) per annum. As a result of the reduction in the tax rate, chargeable income previously taxed at the twenty-eight percent (28%) tax rate has been increased from two million four hundred thousand dollars ($2,400,000) per annum to three million one hundred and twenty thousand ($3,120,000) dollars per annum. Chargeable income up to three million one hundred and twenty thousand ($3,120,000) dollars will now be taxed at twenty-five percent (25%).

Section 36A of the Income Tax Act has been amended to reduce the personal income tax rate from forty percent (40%) per annum to thirty-five percent (35%) per annum to be applied on the chargeable income of individuals in excess of three million one hundred and twenty thousand dollars ($3,120,000) per annum.

ANNUAL STATUTORY DEDUCTIONS ARE:

(A) Personal Allowance

Section 20(1)(a) of the Income Tax Act, Chapter 81:01 has been amended to increase the annual Personal Deduction to one million, five hundred and sixty thousand dollars ($1,560,000), or 1/3 of an individual income from all sources excluding income subject to withholding taxes under section 39(1) per annum whichever is greater.

(B)  Child Allowance(s)

Section 20 (1)(b) of the Income Tax Act, Chapter 81:01, allows for an annual deductible child allowance of one hundred and twenty thousand dollars ($120,000) for each child under the age of eighteen years old. This allowance must not exceed ten thousand dollars ($10,000) monthly per child and will be apportioned according to the individual’s earning period.

Only one person will be entitled to claim for child allowance

Definitions:

“person” includes a mother, father, stepmother or step-father, adoptive parents, guardian and any person who has treated a child as a child of the family.

“child” includes a step-child, or child adopted by law or a child of the family within the meaning of the Family and Dependants Provision Act;

An employee who is eligible for a deduction in respect of a child will be required to fill out the Claim for Deduction in Respect of Child Form and submit the completed form to their employer so that the employer can grant the deduction from their salary.

The employer will be required to make the necessary adjustment to the employee’s salary based on the declaration made in the Claim for Deduction in respect of Child Form.

No deduction shall be granted by the employer to the employee in respect of the child in the absence of the declaration in the Claim for Deduction in Respect of Child form.

(This form will be made available on the GRA website  www.gra.gov.gy )

(C) Second Job Allowance

Section 20 (1)(c) of the Income Tax Act, Chapter 81:01, allows for an annual allowance of six hundred thousand dollars ($600,000) earned on a second job. This allowance must not exceed fifty-thousand dollars monthly ($50,000) and is apportioned accordingly to the individual’s earning period and allowed accordingly. If earnings are less than fifty-thousand dollars monthly ($50,000) the exemption will be limited to the amount actually earned.

To benefit from this allowance monthly, employees must notify their second employer of their full-time principal employment.

(D) Overtime Allowance

Section 20(1)(d) of the Income Tax Act, Chapter 81:01, allows for an annual allowance of six hundred thousand dollars ($600,000) earned from overtime work beyond normal working hours. This allowance will not exceed fifty-thousand dollars ($50,000) monthly and will be apportioned accordingly to the individual’s earning period and allowed accordingly. If earnings are less than fifty-thousand dollars monthly ($50,000) the exemption will be limited to the amount actually earned.

The above allowances are in addition to the following allowances:

(i)                 Medical And Life Insurance Premium Deductions:
Section 16(l) of the Income Tax Act, Chapter 81:01, introduced in 2022, allows for the deduction of medical and life insurance premiums from individual income. The deduction is subject to the lesser of premiums paid, or ten percent (10%) of the individual’s gross income or six hundred thousand dollars ($600,000) annually effective January 1, 2024.

(ii)              National Insurance Scheme Contribution Ceiling (NIS):

Employees are allowed a deduction of 5.6% of their salary. However, the annual ceiling for the National Insurance Scheme Contribution is based on gross income up to two hundred and eighty thousand dollars ($280,000) per month or three million, three hundred and sixty thousand dollars ($3,360,000) annually.

All employed persons are allowed a deduction of fifteen thousand, six hundred and eighty dollars ($15,680) monthly or one hundred and eighty-eight thousand, one hundred and sixty dollars ($188,160) annually when calculating chargeable income.

CHARGEABLE INCOME:

Income Tax will be charged at a rate of twenty-five percent (25%), on the first three million, one hundred and twenty thousand dollars ($3,120,000) annually.

Chargeable income exceeding $3,120,000 annually will thereafter be taxed at a rate of thirty-five percent (35%).

The above rates are in keeping with Sections 36 and 36A of the Income Tax Act, Chapter 81:01.

INCOME FROM ALL SOURCES FOR AGED AND INCAPACITATED PERSONS

Income from all sources for aged and incapacitated persons is now one million, five hundred and sixty thousand dollars ($1,560,000) in keeping with Section 8 of the Income Tax Act, Chapter 81:01.

FILING OF RETURNS

Sections 60(1) (a) of the Income Tax Act, Chapter 81:01 has been amended to allow for the Returns to be filed to the Commissioner-General where the Income is greater than one million, five hundred and sixty thousand dollars ($1,560,000).

DEDUCTION FOR EMPLOYED PERSONS:

(i)      Monthly Personal Allowance (Free Pay) of one hundred and thirty thousand dollars ($130,000), or one-third (1/3) of gross income, whichever is greater.

(ii)    National Insurance Scheme (NIS) Contribution: 5.6% of gross income not exceeding one hundred and eighty-eight thousand, one hundred and sixty dollars ($188,160).

(iii)  Medical and Life Insurance Premium Deductions: Applicable on the amount of premiums paid by the employee, ten percent (10%) of gross salary or fifty thousand dollars ($50,000) monthly, whichever is less.

(iv)   Child allowance (if applicable), ten thousand dollars ($10,000) monthlyfor each child.

(v)    Second Job Allowance (if applicable) first fifty thousand monthly ($50,000)

(vi)   Overtime Allowances (if applicable) first fifty thousand monthly ($50,000)

SELF-EMPLOYED INDIVIDUALS:

(i)     Personal allowance (free pay) of one million, five hundred and sixty thousand dollars ($1,560,000) annually of Total Net Income/Profit, or one-third (1/3) of Total Net Profit/Income whichever is greater

(ii)  Child allowance (if applicable), one hundred and twenty thousand dollars ($120,000) for each child.

(iii)                        Medical and Life Insurance Premium Deductions: Applicable on the amount of premiums paid for medical and life insurance, ten percent (10%) of gross income or six hundred thousand dollars ($600,000) annually, whichever is less.

(iv) With effect from January 1, 2025, the depreciation rate on machinery and equipment used by poultry farmers in the poultry industry has been increased as follows:

Fifty percent (50%) in the first year, twenty-five percent (25%) in the second year, and twenty-five (25%) in the third year.

Additional Information

1. 1. For persons making claims for child allowance, a Child Deduction Claim Form must be filled out and submitted with the applicable supporting documentation to their employers.
   2. Employees with a Second Job, must present their second Employer with the information of full-time employment to allow their second employer to make the deduction of fifty-thousand dollars  ($50,000) monthly from their “second job” salary.
   3. Self-employed individuals should be aware that medical and life insurance premiums must be deducted after calculating the net income, which is determined by subtracting expenses and other allowances. These premiums should not be included as an expense when calculating the chargeable income.
   4. Where employers pay medical and life insurance premium as a benefit to the employee and it is included in the employee’s salary (benefit in kind) then the employee will be allowed the medical and/or life insurance premium as a deduction.
   5. Employees who have private medical and life insurance must obtain a statement from their approved insurance company showing the premiums paid. This statement should be submitted by April 30, 2026, along with their Statement of Earnings or Form 7B when filing their Income Tax Return. This will allow them to benefit from the deduction.
   6. Self-employed individuals with private medical and life insurance must obtain a statement from their approved insurance company showing the premiums paid. This statement should be submitted by April 30, 2026, along with their Financial Statements when filing their Income Tax Return. This will enable them to benefit from the deduction.
   7. Commencing February 2025, employers will be required to adjust their employees’ tax payable using the provided schedule. Employers should use the revised personal allowance to recalculate the employees’ tax payable and refund any over-deducted tax until the employee is fully reimbursed.
   8. The schedule below must accompany the Form 5 for the month of February 2025 to reflect taxes over-deducted. (Please check GRA’s Website for the new form: https://www.gra.gov.gy/forms/ )
   9. In cases where the refund amount exceeds the monthly tax, the remaining balance will be carried forward to the next month or until it is fully refunded to the employee.
   10. Employers are legally required to issue their employees’ earnings statement for the employed period in FORM 7B.
   11. It is mandatory for all employers to promptly implement the new Income Tax Thresholds and deductions.

(COMPUTATIONS)

The General Threshold and Deductions for all Individuals are as follows:

1.       The Threshold and Deductions for Employed Individuals are as follows:

     i.)            Monthly Calculation for Income not exceeding $390,000

   ii.)            Monthly Calculation for Income exceeding $390,000

2.       Computation with Child Allowance ($10,000 per child)

3.       Computation with Allowances (Child and Overtime)

• • Overtime allowance is computed on the basis that the Individual earned overtime for twelve (12) months.

4.       Calculation with Allowances (Child, Overtime and Second Job)

5.       Calculation for Employed Individuals with Overtime Allowance, Child Allowance, 2nd job Allowance and Medical & life Insurance

6.       Self-Employed Individuals with MIR, Child Allowance and Medical & Life Insurance