How does Malawi payroll tax work in 2026?
Malawi taxes employment income at 0% on the first K170,000 a month, then 30%, 35% and 40% in bands. The employer withholds the tax and pays the Malawi Revenue Authority by the 14th of the following month. For companies paying staff in Malawi, 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.
· Malawi guide
Photo: Chimango Hara on Unsplash
Malawi's pay-as-you-earn (PAYE) tax has four rates. The first K170,000 of monthly income is taxed at 0%, income up to K1,570,000 at 30%, up to K10,000,000 at 35%, and the excess at 40%.
The employer calculates the tax, deducts it from pay and pays the Malawi Revenue Authority by the 14th of the following month. The bands came from the Taxation (Amendment) (No. 2) Act, 2025.
How does income tax work for Malawi employees?
Employment income has four rates: 0% on the first K170,000 a month, 30% up to K1,570,000, 35% up to K10,000,000, and 40% above.
Pay up to K170,000 a month falls in the zero band.
| Monthly taxable income (K) | Rate | Annual equivalent (K) |
|---|---|---|
| First 170,000 | 0% | First 2,040,000 |
| 170,001 to 1,570,000 | 30% | Next 16,800,000 |
| 1,570,001 to 10,000,000 | 35% | Next 101,160,000 |
| Above 10,000,000 | 40% | Above 120,000,000 |
| Monthly taxable income (K) | Tax payable (K) |
|---|---|
| 170,000 | 0 |
| 300,000 | 39,000 |
| 1,000,000 | 249,000 |
| 3,000,000 | 920,500 |
The annual table is Appendix B of the Taxation (Amendment) (No. 2) Act, 2025 (Act No. 36 of 2025), published on 30 December 2025. The Malawi Revenue Authority's public notice gives the monthly equivalents and says the measures took effect from 31 December 2025. The tax payable figures are our arithmetic on those bands, before any relief we have not confirmed.
The Authority's 6 May 2026 release on the 2026/27 measures, effective from 14 April 2026, lists no change to these bands. We confirm the table in force before the first payslip.
When does the employer pay PAYE in Malawi?
The employer pays PAYE to the Malawi Revenue Authority by the 14th of the following month.
Withholding tax and fringe benefits tax fall due on the same day.
The Authority's October 2026 reminder lists Pay As You Earn, Withholding Tax and Fringe Benefits Tax as due on 14 October 2026. Returns can be filed on the Msonkho Online portal or at a Domestic Taxes office. We confirm withholding rules for benefits in kind and for non-residents before the first payslip, because we did not read the Taxation Act's current consolidation.
How does the mandatory pension work in Malawi?
Every employer must make each employee a member of a pension fund, with at least 10% from the employer and 5% from the employee on pensionable emoluments.
The employer pays the trustee within 14 days after the end of the month.
The Pension Act, 2023 also requires the employer to keep a life insurance policy for at least the employee's annual pensionable emoluments. The employer may bear all or part of the employee's share if the total is at least the minimums. Late payment carries interest at a rate the Minister prescribes and enforcement action, and the employer remains liable for the deduction it should have made.
The Pension Act, 2023 says every employer must make every employee a member of a pension fund. The minimum contribution is 10% from the employer and 5% from the employee, on pensionable emoluments. The Act has no carve-out for foreign nationals in the section that sets this duty.
What is the TEVET levy?
The TEVET Act charges every employer two per cent of its basic payroll for the previous year, with a 20% penalty on late payment.
The Authority said the 2025/26 levy was due by 1 April 2026.
The Minister can revise the rate by Order and can exempt an employer, so we confirm the rate and any exemption before the first payroll. Employers must keep a basic payroll record in the prescribed form at their principal place of business.
A separate 0.05% money transfer levy applies to bank and e-money transfers. It does not apply to a pay payment from an employer that has paid the TEVET levy and keeps the basic payroll.
What is the workers' compensation assessment in Malawi?
Every employer is liable to assessment into the Workers' Compensation Fund under the Workers' Compensation Act.
The Act sets no assessment percentage, so we confirm the rate before the first payslip.
The employer reports a qualifying injury or death to the Workers' Compensation Board in the prescribed form within 21 days. A worker's application for compensation is made within twelve months of the injury or death, subject to exceptions.
What payroll records and pay statements are required in Malawi?
Each wage payment comes with an itemised statement of gross pay, each deduction and net pay. The employer keeps wage records for three years.
Deductions are limited.
An employer may deduct only the employee's contribution to a compulsory social security scheme, an amount required by law or a court order, and amounts the employee authorises in writing for housing, goods, loans or a savings or pension fund. Authorised deductions together cannot exceed half the employee's wages, and a legal or court-ordered deduction cannot exceed half of the wages for the period. The employer cannot fine an employee, although wages can be withheld for absence without permission.
How does Teamed run Malawi payroll?
Teamed employs your hire from $599 per employee per month, with zero FX markup in any currency, and runs payroll, PAYE, the pension and the levies.
Each statutory cost shows as its own line on the invoice.
Real HR and legal experts check the monthly calculation, and a designated person stays with your first hire. You see PAYE, pension and levy lines itemised, so nothing is hidden in the rate.
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.
See the Malawi cost breakdown for worked examples, or run the Employer Cost Calculator.
Frequently asked questions
What are the income tax rates in Malawi in 2026?
0% on the first K170,000 a month, 30% up to K1,570,000, 35% up to K10,000,000 and 40% above that. The bands come from the Taxation (Amendment) (No. 2) Act, 2025.
When is PAYE due in Malawi?
By the 14th of the following month, according to the Malawi Revenue Authority's monthly reminders.
How much is the pension contribution in Malawi?
At least 10% from the employer and 5% from the employee on pensionable emoluments, paid to the trustee within 14 days after the end of the month, with life insurance for the employee.
What is the TEVET levy rate?
Two per cent of the previous year's basic payroll under the TEVET Act. The Minister can revise it by Order, so we confirm the rate in force.
Malawi withholds tax at 0% to 40% in four bands, due by the 14th, and asks for a pension of at least 10% plus 5%.
The traps are the pension life cover, the TEVET levy and a compensation assessment that has no printed rate.
Check each line before the first payslip.
Looking for a job in Malawi yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.
