Finance Bill 2025: Who will benefit from lower income tax?
From January 1, 2025, all salaries below 6,000 dirhams (USD 600) per month will be fully exempt from income tax. This key measure in the Finance Bill is accompanied by an overhaul of the Income Tax system. One of the main provisions is to raise the first bracket of the exemption scale from 30,000 to 40,000 dirhams (USD 3,000 to 4,000).
This change will immediately exempt all salary income below 6,000 dirhams (USD 600) per month, benefiting a significant proportion of the working population: 80% of private sector employees (compared with 70% at present), almost 47% of civil servants, and around 96% of pensioners.
This reform is also accompanied by a review of the other brackets on the scale, with a gradual reduction in tax rates of up to 50%. This widening of the brackets is intended not only to reduce the tax burden on taxpayers, but also to strengthen tax compliance. In addition, the marginal tax rate will be reduced from 38% to 37%.
For an employee with a net monthly income of 9,989 dirhams (USD 998), this translates into a gain of 435 dirhams (USD 43), while an income of 21,200 dirhams (USD 2,120) will save 546 dirhams (USD 54). Finally, for a net salary of 30,300 dirhams (USD 3,030), the tax saving will be 693 dirhams (USD 69). This new tax grid will not only apply to salaried employees, but also to professional income, thus ensuring greater tax consistency.
Capturing tax-exempt personal income
In addition, a new category of taxable income will be introduced to capture the income of individuals currently escaping taxation. This category will include income identified during the global examination of taxpayers’ tax situation, notably when the source of income has not been justified. It will also include gambling winnings, whether in cash or in kind, whatever their form. It will also include income and miscellaneous gains from profit-making operations not included in any other existing category.
The Finance Bill also proposes the introduction of a flat-rate withholding tax of 30% for entities paying out gambling winnings, as well as for credit institutions, similar bodies or any other entity involved in the payment of online gambling winnings.
This series of measures aims to strengthen tax fairness and adapt the system to current economic realities, while pursuing the objective of reducing the tax burden on households and broadening the income tax base. As part of this reform, an increase in the annual amount of the tax reduction for family responsibilities is also planned. This reduction would rise from 360 to 500 dirhams per dependent. The annual ceiling would thus be raised from 2,160 dirhams (USD 216) to 3,000 dirhams (USD 300), while maintaining the benefit of this reduction for a maximum of six dependents.
Khadija MASMOUDI
