Ghana Income Tax 2026: What Act 1178 Means for Workers and Small Businesses

Ghana Income Tax: Ghana’s Income Tax (Amendment) Act, 2026 (Act 1178) introduces changes that affect both individual taxpayers and small businesses.

The amendment increases the amount of income residents can earn before personal income tax becomes payable and expands the turnover ceiling for businesses that can use the simplified presumptive tax system.

For individual taxpayers, the annual tax-free threshold has increased from GH¢5,880 to GH¢7,056. For qualifying small businesses, the turnover ceiling for the 3% presumptive tax regime has increased from GH¢500,000 to GH¢750,000.

The changes have implications for employees, employers, sole proprietors, traders, artisans and other small-business operators across Ghana.

What Is the Income Tax Amendment Act 2026?

The Income Tax (Amendment) Act, 2026, also known as Act 1178, was assented to on 26 August 2026.

It amends Ghana’s Income Tax Act, 2015 (Act 896), including provisions dealing with personal income tax rates and the turnover threshold for presumptive taxation.

The amendment therefore affects two particularly important areas:

• Personal income tax paid by resident individuals.
• The simplified tax regime available to qualifying small businesses.

The New Personal Income Tax Bands

Ghana Income Tax

Under Act 1178, the annual chargeable-income bands for resident individuals are structured as follows:

Annual chargeable income	Tax rate
First GH¢7,056	0%
Next GH¢960	5%
Next GH¢1,200	10%
Next GH¢34,800	17.5%
Next GH¢192,000	25%
Next GH¢363,984	30%
Income exceeding GH¢600,000	35%

The 35% top marginal tax rate remains in place for annual chargeable income above GH¢600,000.

This means the amendment does not remove the graduated nature of Ghana’s personal income tax system. Instead, it changes the thresholds within which different rates apply.

The Tax-Free Threshold Has Increased by 20%

One of the most noticeable changes is the increase in the tax-free threshold.

Previously, the first GH¢5,880 of annual chargeable income was tax-free. Under Act 1178, the first GH¢7,056 is now taxed at zero percent.

On a monthly basis, this represents an increase from GH¢490 to GH¢588.

The change is particularly relevant to lower-income workers because the increased threshold means more of their earnings can remain outside the personal income tax calculation.

The source also notes that the new threshold aligns with the 2026 National Daily Minimum Wage of GH¢21.77.

What Does the Change Mean for Low-Income Workers?

For resident individuals earning up to GH¢7,056 in annual chargeable income, the first GH¢7,056 is not subject to personal income tax.

According to the supplied analysis, this provides at least GH¢117.60 in annual tax relief compared with the previous threshold.

For workers near the lower end of the income distribution, even relatively small changes in taxation can affect disposable income.

The practical effect will depend on an individual’s chargeable income and other applicable deductions.

What About Middle-Income Employees?

The amendment also affects people earning considerably more than the tax-free threshold.

For taxpayers with annual chargeable income between approximately GH¢7,057 and GH¢50,000, the lower tax bands have been adjusted. The supplied analysis estimates that an employee earning GH¢40,000 annually could save about GH¢250 under the revised structure.

For taxpayers earning between GH¢50,001 and GH¢600,000, the analysis estimates annual savings in the region of GH¢300 to GH¢600, depending on income.

The size of the actual benefit will therefore vary from taxpayer to taxpayer.

Has Ghana Increased the Top Income Tax Rate?

No.

The top marginal rate remains 35% for annual chargeable income above GH¢600,000.

The amendment therefore does not increase the highest personal income tax rate.

For someone earning above that threshold, any tax benefit from the amendment comes from the changes to the lower tax bands rather than a reduction in the 35% marginal rate.

This distinction is important because a 35% marginal rate does not mean that 35% of the person’s entire income is automatically taxed at 35%. Ghana uses a graduated tax structure in which different portions of chargeable income fall into different bands.

Major Change for Small Businesses: The GH¢750,000 Threshold

The second major change concerns Ghana’s presumptive tax system for small businesses.

Act 1178 increases the turnover threshold for the 3% presumptive tax regime from GH¢500,000 to GH¢750,000.

This means that qualifying businesses with annual turnover above GH¢20,000 but not exceeding GH¢750,000 may fall within the simplified 3% turnover-based system, subject to the applicable requirements.

Previously, the upper threshold was GH¢500,000.

The change therefore potentially brings additional businesses into the simplified regime.

What Is Presumptive Tax?

Presumptive taxation is designed to simplify tax compliance for certain small businesses.

Instead of requiring a business to calculate taxable profit through a more detailed accounting process, the relevant 3% regime calculates tax based on turnover.

Turnover is not the same as profit.

If a trader sells GH¢100,000 worth of goods during a year, the GH¢100,000 represents sales turnover. It does not mean the trader made GH¢100,000 in profit.

The source explains that under the modified cash basis, amounts are generally considered when the business actually receives the money, including payments received through cash, mobile money or bank transfers.

How Is the 3% Tax Calculated?

The basic calculation is straightforward:

Annual turnover × 3% = presumptive tax

For example, if a qualifying business records GH¢100,000 in annual sales:

GH¢100,000 × 3% = GH¢3,000

The example in the source uses a provision shop in Kaneshie to illustrate how the calculation can be applied without requiring a complicated tax computation.

Example: A Spare Parts Dealer With GH¢600,000 in Sales

Consider a spare-parts dealer whose annual sales amount to GH¢600,000.

Under the previous threshold, a business at that turnover level would have exceeded the GH¢500,000 ceiling for the simplified 3% regime.

Under the new GH¢750,000 threshold, the business may qualify for the simplified regime, subject to the applicable conditions.

At 3%:

GH¢600,000 × 3% = GH¢18,000

The source uses this example to demonstrate how the amendment can expand access to the simplified tax system for businesses that previously exceeded the turnover ceiling.

Which Businesses May Benefit?

The expanded threshold could be relevant to a range of small businesses, including traders, artisans, sole proprietors and small service providers.

The supplied guidance identifies businesses with annual sales above GH¢20,000 but not exceeding GH¢750,000 as potentially eligible, provided they meet the other applicable requirements, including the VAT-related condition stated in the source.

This could be particularly relevant in major commercial areas such as Makola, Kantamanto, Abossey Okai and Kumasi Central Market, where many small operators conduct substantial trading activities.

Why the New Regime Could Matter to Small Businesses

One attraction of the simplified system is that business owners do not have to calculate tax in the same way as under a conventional profit-based assessment.

The source identifies several potential benefits, including simpler calculations, potentially lower compliance costs for some businesses and reduced paperwork.

However, simplified taxation does not mean that business owners can ignore their records.

Keeping reliable sales information remains important.

Small Businesses Still Need Proper Records

A business operating under a simplified tax arrangement should maintain evidence of its sales.

Business owners should keep a daily sales record, retain receipts and regularly reconcile their sales figures.

The source recommends that businesses add up their sales at the end of the year and engage the Ghana Revenue Authority where they believe they qualify for the expanded 3% presumptive regime.

Good record-keeping can also help a business owner understand whether the business is growing towards or beyond the applicable turnover threshold.

What Happens If a Small Business Supplies a Company?

Another important issue concerns withholding tax.

A small business may still have withholding tax deducted when supplying goods or services to companies, schools, hospitals or public institutions.

The rates identified in the supplied material are:

Type of supply	Withholding rate
Goods	3%
Services	7.5%
Works	5%

For example, if a business supplies stationery worth GH¢10,000 and a 3% withholding tax applies, the buyer could pay GH¢9,700 and issue a withholding tax certificate for GH¢300.

Can Withholding Tax Lead to Double Payment?

The source makes an important distinction here.

For a business operating under the 3% presumptive regime, withholding tax deducted from payments is treated as a tax credit, rather than an additional tax liability.

For example, if the business’s annual presumptive tax liability is GH¢3,000 and it has valid withholding tax certificates worth GH¢1,000, the remaining balance payable would be GH¢2,000, subject to the applicable filing and assessment requirements.

This makes it important for small businesses to keep every withholding tax certificate they receive.

Losing those certificates or failing to properly account for them could create problems when the business calculates its final tax position.

What Small Business Owners Should Do Now

The change in the turnover threshold makes record-keeping even more important.

Business owners should know their annual turnover, maintain sales records and keep documentation relating to withholding tax deductions.

A business should also confirm its tax classification and eligibility directly with the Ghana Revenue Authority rather than assuming that every business below GH¢750,000 automatically qualifies.

What Employers Need to Know

Employers will also need to take the revised personal income tax bands into account when calculating PAYE for employees.

The source recommends that employers update their PAYE computation tables to reflect the revised First Schedule.

Employees who notice changes in their net pay should therefore understand that PAYE calculations may be affected by the revised tax thresholds, alongside other deductions and applicable payroll factors.

What Act 1178 Means in Practical Terms

The amendment has two central effects.

For individuals, the higher tax-free threshold means the first GH¢7,056 of annual chargeable income is now taxed at zero percent.

For qualifying small businesses, increasing the presumptive-tax turnover ceiling from GH¢500,000 to GH¢750,000 potentially allows more businesses to use the simplified 3% turnover-based system.

The changes therefore affect both sides of Ghana’s tax system: employees earning personal income and entrepreneurs operating smaller businesses.

The Bigger Picture for Ghanaian Taxpayers

For individual taxpayers, the immediate issue is understanding how the revised bands affect PAYE and annual chargeable income.

For small businesses, the more significant question may be whether their turnover and business structure place them within the expanded presumptive tax framework.

Neither group should rely solely on the headline figures.

Tax liability can depend on the taxpayer’s specific circumstances, applicable deductions, business classification and other provisions of Ghana’s tax laws.

Final Takeaway

Ghana’s Income Tax (Amendment) Act, 2026 (Act 1178) introduces important changes to personal income taxation and presumptive taxation.

The increase in the individual tax-free threshold from GH¢5,880 to GH¢7,056 provides additional tax-free income for resident individuals, while the increase in the presumptive tax turnover ceiling from GH¢500,000 to GH¢750,000 expands the potential reach of the simplified 3% regime for qualifying small businesses.

For employees, understanding the revised PAYE bands is important.

For entrepreneurs, keeping accurate sales records and retaining withholding tax certificates is equally important.

The amendment may simplify tax obligations for some taxpayers, but businesses and individuals should still confirm their specific obligations with the Ghana Revenue Authority or a qualified tax professional before making tax decisions.

Ghana’s Income Tax Amendment Act 2026 raises the tax-free threshold to GH¢7,056 and the presumptive tax turnover limit to GH¢750,000. Here’s what taxpayers need to know.

Source: TV3

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