Income Tax Relief Delayed Until 2026 Despite Adjusted Salary Deductions

An increase in the income tax threshold was announced ten months ago.  Despite the long-awaited relief, the government is reminding employees that they may not be seeing the benefits of the amended tax brackets until next year, 2026.  If applicable, workers would already be seeing the adjusted deductions from their salaries, but those new numbers would not be reflected until next year when taxes are filed.  Director General of the Belize Tax Service, (BTS) Michelle Longsworth, explained that the amendments include the removal of the one-hundred-dollar personal relief among other changes including a tax credit.  

Michelle Longsworth, Director General, Belize Tax Service: “The personal relief, as I said, is $20,000. That is standard. So every paying tax employee gets a personal relief of $20,000. That is minus from your total emoluments. You pay taxes on the difference  after the $20,000 has been subtracted. That’s your personal relief. All right, that personal relief covers things like It’s a policy, if you want to put it like that, to assist in education with your children. You don’t have to claim that you already have that personal relief that has been given to everyone across the board, $20,000 per year. And remember now, it’s not for 2024. So come this year, persons who are filing, remember you filed for 2024 in March 2025. This does not apply. This will apply when you file in 2026 for the year 2025. But employers should be applying this to take out the taxes from your salary to pay in monthly now. When you file March 2026, this will apply. This new system will apply. That is the way it should be done. The intention of this amendment was to ensure that the government’s commitment that they would increase the threshold which then would allow less people to be paying taxes. When you look at the bracket $29,000 and one cents to $32,000, after you deduct that 25 % many persons in that bracket would still have been taking home less than $29,000. And remember the commitment was that $29,000 and below, no taxes. So to ensure that if you’re in that bracket, you’re not taking less than the person making $29,000, the tax credit is applied. That’s the intention of it, so that persons have more income that they can spend.”

For simplicity, Longsworth gave a detailed breakdown of how the deductions have been adjusted with the new formula.

Michelle Longsworth, Director General, Belize Tax Service: “Let’s say you earn $1,120 every two weeks, which adds up to $29,120 for the year. So that’s what you’re making. So because you earn $29,120, you fall between that bracket that gets a personal relief, or you get that tax credit sorry. So you get the standard $20,000 personal relief. Your taxable income on this $29,120 would have been $29,120 minus the $20,000 which is the personal relief. So your taxable income would only be the $9,120. That $9,120 would then be multiplied by the 25 % because yes employees pay 25 % tax on their emoluments. So in effect, you would have been paying $2,280 for the year in taxes. But this would leave you with a take-home of $26,000 because if we take your $29,120 minus $2,280, you would only take home $26,840. That is below the $29,000 threshold. So a tax credit of  $2,160 is applied. Okay?  This means your actual tax that you will owe now is only $120 for the year. That is  something like $4.62 every two weeks.  Right? So you see the difference. You would, in the old system, you would have paid the $2,280 but now it has reduced to $120. That’s the tax you would pay because you get a tax credit between that bracket.”

For a definite calculation of your tax deduction, you can go to the BTS website to access the tax calculator.  The website is www.bts.gov.bz