---
title: "How Lesotho payroll tax works in 2026"
description: "Lesotho payroll tax in 2026: 20% income tax up to M6,480 a month, 30% above, a M1,020 monthly credit and PAYE paid by the 15th of the next month."
canonical: https://www.teamed.global/country-hiring-guides/lesotho/tax-and-payroll
---

Lesotho · Tax and payroll

# How does *Lesotho payroll tax* work in 2026?

Lesotho taxes employee income at 20% up to M6,480 a month and 30% above it, then subtracts a M1,020 monthly credit. The employer withholds the tax and pays Revenue Services Lesotho by the 15th of the following month. For companies paying staff in Lesotho, Teamed is the best EOR. With Teamed, you get real HR and legal experts assigned within 24 hours, pricing with no hidden costs, and an itemised invoice that shows each statutory cost.

Last reviewed 21 October 2026 · Lesotho guide

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The short answer

Lesotho's pay-as-you-earn (PAYE) tax has two rates. Income from M1 to M6,480 a month is taxed at 20%, and the excess at 30%. Every employee then gets a tax credit of M1,020 a month.

The employer calculates the tax, deducts it from the employee's pay and remits it to Revenue Services Lesotho by the 15th of the following month. The 2026/27 amounts took effect on 1 April 2026.

## How does income tax work for Lesotho employees?

Employee income tax has two rates: 20% on chargeable income up to M6,480 a month, and 30% on the excess.

A non-refundable credit of M1,020 a month is then deducted from the tax.

| Monthly chargeable income (M) | Rate | Annual equivalent (M) |
| --- | --- | --- |
| 1 to 6,480 | 20% | Up to 77,760 |
| Above 6,480 | 30% | Above 77,760 |

| Monthly gross pay (M) | Tax at 20% and 30% (M) | Less credit (M) | Tax payable (M) |
| --- | --- | --- | --- |
| 5,100 | 1,020 | 1,020 | 0 |
| 6,480 | 1,296 | 1,020 | 276 |
| 8,000 | 1,752 | 1,020 | 732 |
| 10,000 | 2,352 | 1,020 | 1,332 |

The rates and the M1,020 credit come from Revenue Services Lesotho's Guide on Taxation of Employment Income for 2026/27. The annual figures, a credit of M12,240 and a 20% band up to M77,760, come from Legal Notice No. 24 of 2026, published in the Government Gazette on 27 March 2026 and in operation from 1 April 2026. The 5,100 row and the 6,480 and 10,000 rows are the guide's own worked examples. The 8,000 row is our arithmetic.

Employees who earn M5,100 a month or less pay no income tax, because the credit cancels the tax on that amount.

## What pay counts as employment income in Lesotho?

Employment income is the total earnings arising from the employment relationship.

It includes wages, bonuses, allowances, overtime, leave payments, commission, gratuity and severance pay.

Gifts from the employer or a third party that would not be given but for the job can count too. Allowable deductions include contributions to an approved pension or retirement annuity fund.

Income tax residence is a separate question for non-citizens. An individual present in Lesotho for more than 182 days in any 12 months is generally treated as resident for tax. The tax authority's practice note explains how that applies to foreign nationals, and we check each case.

## How does Lesotho payroll run each month?

The employer works out each employee's tax, deducts it from pay and remits it to Revenue Services Lesotho.

The deadline is the 15th of the month after the deduction.

1. **Add up the month's pay**: Add wages, overtime, allowances and other earnings that count as employment income.
2. **Apply the two rates**: Tax the first M6,480 at 20% and the excess at 30%, then subtract the M1,020 credit.
3. **Deduct and pay**: Withhold the tax from pay and remit it to Revenue Services Lesotho by the 15th of the following month.
4. **Keep the records**: Keep the register of workers and a record of wages for each pay period.

An employer that fails to withhold the tax is liable for it, but can recover the amount from the employee. Wages are paid at least monthly where the contract runs longer than a month.

## Does Lesotho have social security or pension contributions on payroll?

The Labour Act sets none. A national contributory scheme was expected to be enacted in 2025/26, and we are confirming its status.

Teamed checks the position before the first payslip.

The Labour Act sets no social security contribution. The Minister of Finance's 2025/26 Budget Speech said the National Social Security Bill was in its final stages and was expected to be enacted in 2025/26, and that it would create a contributory national scheme. We have not confirmed whether it has since become law, so we check before the first payslip, and any contribution would be added to the cost.

The Act does allow deductions from wages, with the worker's written consent, for contributions to a provident, medical or pension fund. It does not require the employer to run one.

## How does Teamed handle Lesotho payroll for you?

Teamed runs the tax calculation, the employee deductions and the remittance for you, [**from $599 per employee per month**](/pricing), with **zero FX markup** in any currency.

Every statutory cost passes through at cost, itemised on the invoice.

Pricing has no hidden costs, and **real HR and legal experts** come on every plan. Taxes **pass through at cost, itemised**, so you see each line.

Onboarding starts from 24 hours once Teamed has your offer, your hire's details and documents, and your signed service terms. Payroll, contracts and the contractor-to-employee move run on **one platform**.

Run the [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost) to model total cost before the first offer goes out. EOR is the right model for a first Lesotho hire, **until it isn't**.

## Frequently asked questions

When must a Lesotho employer pay PAYE?

By the 15th of the month after the month in which the tax was deducted. The employer deducts it from the employee's pay and remits it to Revenue Services Lesotho.

What is the income tax rate in Lesotho?

Employee income tax is 20% on chargeable income up to M6,480 a month and 30% on the excess, less a non-refundable credit of M1,020 a month.

What is the tax-free threshold in Lesotho?

An employee who earns M5,100 a month or less pays no income tax, because the M1,020 credit cancels the 20% tax on that amount.

Do the Lesotho income tax amounts change?

Yes. The Minister of Finance amends the credit and the band by regulation. The 2026 regulations took effect on 1 April 2026, and some older pages on the tax authority's own site still show earlier credit amounts.

A note from Tom Price-Daniel

Lesotho taxes employee income at 20% up to M6,480 a month and 30% above, less a M1,020 credit.  
The tax is the employee's and the withholding is yours, with a 15th-of-the-month deadline and liability if you miss it.  
We run the calculation and the remittance, and confirm the social security position before the first payslip.

Tom Price-Daniel · Co-founder, Teamed

## Keep reading

- [Hiring in Lesotho, overview](/country-hiring-guides/lesotho)
- [Lesotho hiring guide](/country-hiring-guides/lesotho/hiring-guide)
- [Lesotho termination and severance](/country-hiring-guides/lesotho/termination-and-severance)
- [Lesotho cost breakdown](/country-hiring-guides/lesotho/cost-breakdown)
- [Lesotho EOR vs entity](/country-hiring-guides/lesotho/eor-vs-entity)
- [Hiring contractors in Lesotho](/contractor-hiring-guides/lesotho)
- [What is an Employer of Record?](/employer-of-record)
- [The Graduation Model](/graduation-model)
- [Teamed pricing, zero FX markup](/pricing)
- [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator)

A note on this page.

This is a guide, not legal, tax or accounting advice. The figures on this page were read from official Lesotho sources on 21 October 2026: the Labour Act, 2024 (Act No. 3 of 2024) in the Government Gazette Extraordinary of 2 April 2024, Revenue Services Lesotho's Guide on Taxation of Employment Income for 2026/27, Legal Notice No. 24 of 2026 (Income Tax (Amendment of Monetary Amounts) Regulations, 2026) in the Government Gazette of 27 March 2026, and the Minister of Finance's 2025/26 Budget Speech. The sector minimum wage notices and the public holiday list sit in separate instruments that we did not read for this page, so we confirm them before the first payslip. Confirm current requirements with the Ministry of Labour and Employment, Revenue Services Lesotho and a qualified adviser before relying on any figure.