Finance Minister announces gradual income tax threshold increase to $2 million

The income tax threshold will be increased to $2 million over a three-year period starting April 1, the Government has announced.

Finance Minister Fayval Williams stated that the threshold would first rise to $1.8 million, then to $1.9 million, and finally to $2 million.

"Doing it this way means our hardworking taxpayers don’t have to guess year after year if the threshold is going to increase," she said on Tuesday while opening the 2025-2026 budget debate.

Income earned at or below the threshold is not subject to income tax.

This increase continues a trend that started with the significant jump to $1.5 million in 2017, fulfilling a 2016 Jamaica Labour Party election promise.

The threshold was raised to $1.7 million at the start of the current fiscal year in April, at a cost of $9 billion.

Williams did not specify how much this latest increase would cost.

However, in his budget presentation last year, then-Finance Minister Dr. Nigel Clarke stated that it would have cost the Government $23.6 billion to raise the threshold to $2.1 million.

Clarke also noted that it would cost $34.6 billion to raise the threshold to $2.5 million, and over $45 billion to move it to $3 million.

The Opposition People's National Party, which opposed the income tax threshold increase nearly a decade ago, has called for an increase to $3 million.

Opposition Leader Mark Golding argued that such an increase would restore the real value of the $1.5 million threshold implemented in 2017.

However, he has not outlined how a future PNP administration would fund this level of increase.

Williams also noted that in 2023, there were 652,220 individuals earning up to $6 million annually and paying PAYE or income tax.

- Jovan Johnson

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