Government Overhauls Income Tax Slabs and Raises Untaxed Threshold to Rs 1 Million

KATHMANDU — The Ministry of Finance implemented sweeping adjustments to personal income taxation under the Economic Act, 2026.

Under the revised structure, the minimum untaxed income threshold for individuals was doubled from Rs 500,000 to Rs 1 million, with earnings up to that ceiling subjected to a base 1 percent social security tax. Additionally, the maximum individual income tax bracket was lowered from 39 percent to 29 percent, providing substantial relief to middle- and upper-middle-income earners while standardizing corporate tax compliance.