One of the most common questions employees ask is how much income tax is withheld from their salary. From 2026, the Tax Code sets a separate, phased scale for people working in the private non-oil-and-gas sector. In this article we explain that scale, the general rule and the 200 manat exemption in plain language.
Who pays income tax, and how?
Income tax on monthly employment income is calculated by the employer and withheld at source. The rate depends on the sector the employee works in:
- private non-oil-and-gas sector — a separate, phased scale (Tax Code, Article 101.1-1);
- public and oil-and-gas sector — the general rule (Tax Code, Article 101.1).
So the first step is to determine which group the employee belongs to.
2026: the scale for the private non-oil sector
From 1 January 2026 to 1 January 2027, the following rates apply to monthly salaries in the private non-oil sector (Tax Code, Article 101.1-1.1):
| Monthly salary | Income tax |
|---|---|
| up to 2500 manat | 3% |
| 2500–8000 manat | 75 manat + 10% of the amount above 2500 manat |
| over 8000 manat | 625 manat + 14% of the amount above 8000 manat |
This scheme replaced the 7-year exemption that applied until the end of 2025.
What changes in 2027 and 2028?
The law provides for a phased increase (Tax Code, Articles 101.1-1.2 and 101.1-1.3):
- in 2027 the rate for salaries up to 2500 manat will be 5%, and for the 2500–8000 manat range 125 manat + 10% of the excess;
- from 1 January 2028 the rate for salaries up to 2500 manat will be 7%, and for the 2500–8000 manat range 175 manat + 10% of the excess.
Companies planning their payroll budget will benefit from taking these stages into account in advance.
The general rule in the public and oil-and-gas sector
For employees outside the private non-oil sector (for example, in the public and oil-and-gas sector), the general rule applies (Tax Code, Article 101.1, Table 1):
- monthly salary up to 2500 manat — 14%;
- over 2500 manat — 350 manat + 25% of the amount above 2500 manat.
The 200 manat exemption: who is eligible?
For an employee whose monthly income at their main place of work (where their employment record book is kept) is up to 2500 manat, 200 manat of that income is exempt from income tax (Tax Code, Article 102.1.6). With annual income of up to 30,000 manat, the exemption amounts to 2400 manat a year.
The exemption applies only at the main place of work — it is not taken into account at a secondary job.
Summary
- In the private non-oil sector in 2026, salaries up to 2500 manat are taxed at 3%.
- 2500–8000 manat: 75 manat + 10% of the excess; over 8000 manat: 625 manat + 14% of the excess.
- The rate will be 5% in 2027 and 7% from 2028 (for the part up to 2500 manat).
- The general rule in the public and oil-and-gas sector: 14% and 350 manat + 25%.
- Employees earning up to 2500 manat at their main job have 200 manat exempt from tax.
This information is general in nature. To set up payroll and tax calculations correctly in your company, message us on WhatsApp: +994 77 734 10 12
📚 Sources
🌐 The original article is in Azerbaijani; the official sources are available in Azerbaijani.
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