Taxes in Rwanda
Senior 2 · Entrepreneurship
Taxes in Rwanda
Lesson 4 of 5
22 min
When you get your first job, your contract will state a gross salary, but the money that reaches your account will be smaller. The largest deduction is usually PAYE. Employers must calculate it correctly every month, and employees should be able to check it.
PAYE (Pay As You Earn) is the income tax on employment income. The employer withholds it from each employee's pay and pays it to RRA within 15 days after the end of the month. The employee therefore pays income tax gradually, month by month, instead of in one large amount.
These are the bands RRA publishes for monthly taxable employment income (checked September 2026):
| Monthly taxable income (Frw) | Rate on the part inside this band | Most tax this band can add (Frw) |
|---|---|---|
| 0 to 60,000 | 0% | 0 |
| 60,001 to 100,000 | 10% | 4,000 |
| 100,001 to 200,000 | 20% | 20,000 |
| above 200,000 | 30% | no limit |
Each rate applies only to the part of the salary inside that band. A worker earning 150,000 Frw does not pay 20% on all 150,000 Frw.
Written by Ganzaa. Ishimwe is a shop assistant in Musanze with a gross salary of 150,000 Frw a month.
| Band | Amount in band (Frw) | Rate | Tax (Frw) |
|---|---|---|---|
| 0 to 60,000 | 60,000 | 0% | 0 |
| 60,001 to 100,000 | 40,000 | 10% | 4,000 |
| 100,001 to 150,000 | 50,000 | 20% | 10,000 |
| Total | 150,000 | 14,000 |
PAYE = 14,000 Frw. Before other deductions, Ishimwe keeps 150,000 − 14,000 = 136,000 Frw.
The marginal rate is the rate on the last franc earned: 20% for Ishimwe, 30% for the second worker. The average rate is total PAYE ÷ gross salary × 100: for Ishimwe 14,000 ÷ 150,000 × 100 ≈ 9.3%, and for the second worker 69,000 ÷ 350,000 × 100 ≈ 19.7%. The average rate rises with income, which is what makes PAYE progressive.
Tip
Shortcut. The tax on exactly 100,000 Frw is 4,000; on exactly 200,000 Frw it is 24,000. So for a salary S above 200,000, PAYE = 24,000 + 30% of (S − 200,000). For S between 100,000 and 200,000, PAYE = 4,000 + 20% of (S − 100,000). Always show the band-by-band working in an exam.
Solution: 0 on the first 60,000; 10% of 30,000 = 3,000. PAYE = 3,000 Frw.
Solution: 4,000 + 20% of 20,000 = 4,000 + 4,000 = 8,000 Frw.
Solution: 24,000 + 30% of 50,000 = 24,000 + 15,000 = 39,000 Frw. Pay left = 211,000 Frw.
Solution: Nothing. All of her salary is inside the 0% band.
Solution: 30% applies only to the part above 200,000 Frw. The lower parts are taxed at 0%, 10% and 20%, so the correct PAYE is 39,000 Frw.
Summary
Sources and credits
The salary examples and the practice items are written by Ganzaa.
This lesson adapts CC BY-SA material and is shared under CC BY-SA 4.0.
