Ever wondered why the salary stated in your employment contract is higher than the amount that actually lands in your bank account?

One major reason is Pay As You Earn (PAYE), the income tax deducted from employees’ salaries by their employers and paid to the Ghana Revenue Authority (GRA) on their behalf.

PAYE is calculated using a graduated tax system, meaning different portions of your income are taxed at different rates. This means an employee does not pay the highest tax rate on their entire salary.

See why some passengers are paying more than the approved 8% fare increase

The current PAYE rates for resident individuals took effect on September 1, 2026. Under the system, the first GH¢588 of monthly chargeable income is tax-free, while higher portions are taxed at rates ranging from 5% to 35%.

The important thing to understand is that you do not pay one tax rate on your entire salary. Different portions of your income are taxed at different rates.

For example, if you earn GH¢3,000 a month, SSNIT is deducted before PAYE is calculated. After the applicable deductions, the amount you take home will be lower than your gross salary.

Chargeable income refers to the amount on which PAYE is calculated after allowable deductions. SSNIT is one of the key deductions, with employees generally contributing 5.5% of their basic salary.

The actual amount deducted from an employee’s salary can vary depending on allowances, benefits and other components of employment income.

For non-resident individuals, the GRA generally applies a flat tax rate of 25% on chargeable income.

Employers are responsible for calculating and deducting PAYE from employees’ income before paying the tax to the GRA. They are also required to file their monthly PAYE returns and make the necessary payments within the prescribed deadline.

So, when the amount on your payslip is lower than the salary stated in your employment contract, PAYE and SSNIT are among the deductions that may account for the difference.

No cocoa farmer is owed money despite LBC debt – COCOBOD

The key thing to remember is that PAYE is not a single percentage taken from your entire salary. Your income is divided into tax bands, with each portion taxed at the rate applicable to that band.

DR/MA

Inside Ghana’s Abandoned Engineering Powerhouse: What Went Wrong?