The personal exemption in salary tax is EGP 20,000 a year for every employee, deducted from income before the brackets apply. It is set by item 1 of Article 13 of the Income Tax Law as replaced by Law No. 7 of 2024, and the amendments made by Law No. 151 of 2026 did not change it, so this is the position as of October 2026.
Step by step
- 1
Where it sits in the calculation
Annual gross minus the employee insurance share minus EGP 20,000, and the brackets then apply to the rest.
- 2
Separate from the zero bracket
The exemption comes on top of the zero bracket up to EGP 40,000, so anyone whose net income does not exceed EGP 600,000 pays no tax on the first EGP 60,000 a year after insurance, or EGP 5,000 a month.
- 3
It stays for high incomes
Above EGP 600,000 the zero bracket disappears, but the personal exemption is still deducted before the tax is calculated.
- 4
Estimate its real value
The saving equals EGP 20,000 times the rate of the bracket your income falls in, so if your income stays in the 20% bracket before and after the exemption, it saves you EGP 4,000 a year.
- 5
Spread across the year
Tax is calculated annually and then divided by 12, so the exemption is not taken from a single month's pay, and its effect is spread over the months.
A common mistake is leaving an old exemption amount or old brackets in the payroll software after the law changes. Check the exemption and brackets in the software with every tax amendment, before the first payroll it applies to.
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