Egyptian Income Tax Brackets 2026: A Complete HR Guide

Understanding Egyptian income tax is essential for any HR professional processing payroll. This guide walks through the full calculation methodology as implemented in Alpha HR's payroll engine.

The 7 Income Tax Brackets

Egypt uses a progressive tax system. For the 2025/2026 tax year, the brackets are:

| Annual Taxable Income (EGP) | Tax Rate | |---|---| | 0 – 40,000 | 0% | | 40,001 – 55,000 | 10% | | 55,001 – 70,000 | 15% | | 70,001 – 200,000 | 20% | | 200,001 – 400,000 | 22.5% | | 400,001 – 1,200,000 | 25% | | Over 1,200,000 | 27.5% |

Social Insurance

Before income tax is calculated, social insurance contributions are deducted from the gross salary. These are calculated on the insured salary, which is capped at a maximum set by the National Organisation for Social Insurance (NOSI).

| Contribution | Rate | Paid by | |---|---|---| | Employee | 11% | Employee | | Employer | 18.75% | Employer |

Step-by-Step Calculation

Here's how Alpha HR calculates net salary for a monthly gross of EGP 25,000:

1. Insured Salary

Insured salary = min(25,000, SI cap) = 12,000 (example cap)
Employee SI = 12,000 × 11% = EGP 1,320/month

2. Annual Taxable Income

Annual gross = 25,000 × 12 = 300,000
Annual employee SI = 1,320 × 12 = 15,840
Personal exemption = 20,000 (standard)
Taxable income = 300,000 - 15,840 - 20,000 = 264,160

3. Apply Brackets

First 40,000 → 0% = 0
40,001–55,000 (15,000) → 10% = 1,500
55,001–70,000 (15,000) → 15% = 2,250
70,001–200,000 (130,000) → 20% = 26,000
200,001–264,160 (64,160) → 22.5% = 14,436
Annual tax = 44,186
Monthly tax = 44,186 ÷ 12 = EGP 3,682

4. Net Salary

Net = 25,000 - 1,320 - 3,682 = EGP 19,998

Why Rates Should Never Be Hardcoded

Tax brackets change. The Egyptian government adjusts rates and thresholds. Alpha HR stores all brackets and rates in a tax_config database table — so when rates change, you update a record, not the codebase. No deployments needed.

Key Takeaways for HR Teams

1. Always calculate on annual taxable income, not monthly
2. Apply the personal exemption before tax brackets
3. Social insurance uses a capped insured salary, not gross
4. The employer SI (18.75%) is a payroll cost — not deducted from employee net
5. Use a configurable system so you can update rates without IT involvement

Alpha HR's payroll module implements all of this automatically. Enter the gross salary and it outputs the complete breakdown instantly.