Namibia’s Ministry of Finance announced plans to adjust personal income tax brackets in the second quarter of the year, aiming to reduce fiscal drag and improve fairness in the taxation system.
Finance Minister Ericah Shafudah revealed the forthcoming changes during the tabling of the national budget last week. “The income tax amendment bill is currently under legal review and is set to be presented in the second quarter of 2026,” Shafudah said, stressing the government’s commitment to progressive taxation.
The adjustment is intended to update personal income tax rates and thresholds to reflect economic changes, ensuring adequacy of revenue while maintaining equitable taxation over the next two financial years. Shafudah noted that the reforms would benefit a broad range of earners, preventing stagnation of tax burdens that can arise when brackets are not periodically reviewed.
This will be the first major adjustment since the 2023/24 financial year, when the government raised the threshold for the lowest tax bracket, exempting individuals earning less than N$100,000 annually from income tax. The 2023/24 review also extended relief to higher income brackets and marked the first revision of Namibia’s tax brackets in a decade.
Officials say the upcoming changes aim to keep pace with inflation and wage growth, ensuring that taxpayers are not pushed into higher brackets solely due to nominal increases in earnings. By doing so, the government hopes to maintain the progressive nature of the tax system while securing necessary revenue for public services and development projects.
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Shafudah highlighted that timely adjustments to tax brackets are a crucial component of fiscal policy, noting that uncorrected brackets can inadvertently penalize middle- and lower-income earners over time. The ministry intends to issue detailed guidelines and updated rates once the amendment bill is finalized and presented to parliament.
Analysts expect the changes to provide relief to households facing rising living costs while supporting government revenue targets. The reforms are also seen as part of a broader effort to modernize Namibia’s tax system and ensure transparency and fairness in collection.
The ministry’s announcement comes amid ongoing economic recovery efforts, with policymakers balancing the need for revenue generation against the impact of taxation on citizens’ disposable incomes. The review of income tax brackets is anticipated to be closely watched by both businesses and individual taxpayers, particularly in light of Namibia’s previous decade-long hiatus in bracket adjustments.
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Implementation of the revised brackets is expected to take effect from April 2026, ensuring that the changes coincide with the start of the new fiscal reporting period. Shafudah reaffirmed the government’s commitment to an equitable tax regime that supports economic growth and social welfare.
Namibia’s personal income tax system is progressive, with rates increasing as taxable income rises. However, before 2023, the tax brackets had not been adjusted for over a decade, meaning that inflation and wage growth had gradually pushed more earners into higher tax bands, creating a phenomenon known as fiscal drag. Fiscal drag occurs when taxpayers pay a higher effective tax rate over time despite no real increase in purchasing power, reducing fairness in the tax system.
In the 2023/24 financial year, the government implemented its first adjustment in 10 years. Individuals earning less than N$100,000 annually were exempted from income tax, and relief was extended to other income brackets. This measure aimed to restore progressivity to the tax system and provide relief to low- and middle-income earners.
The Ministry of Finance now plans another adjustment in April 2026, as part of its ongoing review of personal income tax rates and thresholds. The changes are intended to:
- Reduce fiscal drag and ensure tax burdens remain fair.
- Align brackets with inflation and wage growth.
- Maintain progressive taxation while securing adequate government revenue.
- Support households’ disposable income amid rising living costs.
The adjustments are part of broader fiscal policy efforts in Namibia to modernize taxation, improve revenue collection, and balance social equity with sustainable economic growth. Legal review of the income tax amendment bill is ongoing, with the finalized legislation expected to be presented in the second quarter of 2026.
