The personal relief for Y/A 2025/2026 is LKR 1,800,000 a year (LKR 150,000 a month), raised from LKR 1,200,000 under the Inland Revenue (Amendment) Act, No. 02 of 2025. If your total assessable income from all sources for the year is LKR 1,800,000 or less, your income tax is nil. Above that, only the amount in excess of LKR 1,800,000 is taxed through the progressive bands. Every resident individual gets this relief — it is applied once, against your total income, before any rate is calculated.
The personal relief is the amount of income every resident individual in Sri Lanka can earn before any income tax applies. For the Year of Assessment 2025/2026, it is LKR 1,800,000 a year — and understanding how it works is the first step to knowing what you actually owe.
What the personal relief is
The personal relief is Sri Lanka's tax-free threshold for resident individuals. Think of it as a fixed shield over the bottom portion of your income: the first LKR 1,800,000 you earn in a year is set aside before any rate is applied, regardless of how much more you earn above it.
Two things to notice:
- It is the same amount for everyone — LKR 1,800,000 — whether you earn LKR 2,000,000 or LKR 20,000,000. The first LKR 1,800,000 is always free.
- It applies to total assessable income from all sources combined — salary, rental income, bank interest, dividends, business profits, and anything else — not to each source separately.
The relief was raised from LKR 1,200,000 to LKR 1,800,000 with effect from 1 April 2025, under the Inland Revenue (Amendment) Act, No. 02 of 2025, published by the Inland Revenue Department (IRD). The increase of LKR 600,000 means income that was taxed last year is now tax-free.
How the relief is applied: before the bands
The order of the calculation matters. The personal relief is subtracted first, and the progressive tax bands apply only to what remains. That remainder is your taxable income.
The method has four steps:
- Total your assessable income — add up all income from employment, rental, interest, dividends, business, and any other assessable source for the year.
- Subtract the personal relief of LKR 1,800,000.
- Floor the result at zero — if the relief exceeds your income, taxable income is nil, never negative.
- Apply the progressive bands to the remaining taxable income.
Because the relief comes off before any rate touches the income, the first LKR 1,800,000 is never taxed at any rate. A person earning LKR 1,800,001 and a person earning LKR 10,000,000 both have the same LKR 1,800,000 exempt at the base.
The bands that apply after the relief
Once the personal relief is removed, the taxable balance is taxed through these progressive bands for Y/A 2025/2026:
| Taxable income after relief (LKR) | Equivalent total income band (LKR) | Rate | Max tax on this band (LKR) |
|---|---|---|---|
| First 1,000,000 | 1,800,001 – 2,800,000 | 6% | 60,000 |
| Next 500,000 | 2,800,001 – 3,300,000 | 18% | 90,000 |
| Next 500,000 | 3,300,001 – 3,800,000 | 24% | 120,000 |
| Next 500,000 | 3,800,001 – 4,300,000 | 30% | 150,000 |
| Balance | Above 4,300,000 | 36% | — |
Each band taxes only the slice of income that falls inside it. Moving into a higher band never increases the rate on income already taxed at a lower band. A salary of LKR 3,000,000 does not push the first LKR 1,000,000 of taxable income from 6% to 18% — only the portion above LKR 2,800,000 of total income is taxed at 18%.
A few conditions matter: the old 12% band was removed from 1 April 2025. Income that previously sat in that band now falls partly in the 6% band and partly in the 18% band, depending on the income level. For a full comparison of how the band removal changed the tax, see our guide on what changed in income tax for 2025/2026.
The monthly equivalent: LKR 150,000
The yearly relief of LKR 1,800,000 divided evenly across twelve months gives LKR 150,000 a month. This is why a monthly salary at or below LKR 150,000 from a primary employment generally attracts no monthly Advance Personal Income Tax (APIT) deduction — the employer's payroll applies the full relief across the year through the IRD's monthly APIT tables (Table 02 for resident employees).
Two things to notice:
- The monthly LKR 150,000 is a convenience for payroll deduction, not a separate monthly threshold. The actual liability is always calculated on the total annual income in the annual return, where the full LKR 1,800,000 is applied once.
- If your salary fluctuates month to month — bonuses, variable pay, commissions — your employer recalculates the monthly deduction based on the projected annual total. This is reconciled when you file your return.
Check your monthly APIT deduction in the APIT calculator
For a full explanation of how APIT works — including primary vs secondary employment and how the monthly tables are calculated — see our APIT guide.
Who qualifies for the personal relief
The relief is available to resident individuals only.
Residency test: you are generally resident in Sri Lanka for a year of assessment if you are present in Sri Lanka for 183 days or more in that year, or if you maintain a permanent place of abode in Sri Lanka. Non-resident individuals are taxed on Sri Lanka-source income at different rates and do not receive the personal relief.
Primary and secondary employment: the LKR 1,800,000 relief is applied against one primary employment for APIT purposes. If you hold two jobs simultaneously, one is your primary employment (the one to which you direct the relief) and the other is secondary. Secondary employment income is deducted at source at a higher proportional rate without the benefit of the personal relief, because the relief has already been allocated to the primary employer.
A few conditions matter:
- If you change employers during the year, notify your new employer of your prior employment income so they can recalculate the APIT correctly.
- If you have only one employer but also earn rental income, bank interest, or other income, the personal relief still applies only once — across the combined total in the annual return.
One relief per person: the relief is per individual, not per household. A married couple each working both get their own LKR 1,800,000 relief. Income cannot be shifted between spouses to claim a double relief against one pool of income.
Worked examples
These four examples show how the personal relief and bands combine at different income levels for Y/A 2025/2026. Each assumes a single primary employment with no other income, no other reliefs, and no tax credits.
Example 1 — Income below the threshold: LKR 1,500,000 a year
Scenario: Dilshan earns a salary of LKR 1,500,000 a year (LKR 125,000 a month). No other income.
| Step | Item | Amount (LKR) |
|---|---|---|
| 1 | Assessable income | 1,500,000 |
| 2 | Less: personal relief | (1,800,000) |
| 3 | Taxable income (floored at zero) | 0 |
| — | Tax payable | 0 |
Dilshan's entire income falls below the relief. His income tax for Y/A 2025/2026 is nil. His employer should also be making no APIT deduction on a salary at this level.
Example 2 — Just above the threshold: LKR 2,400,000 a year
Scenario: Amali earns LKR 2,400,000 a year (LKR 200,000 a month). No other income.
| Step | Item | Amount (LKR) |
|---|---|---|
| 1 | Assessable income | 2,400,000 |
| 2 | Less: personal relief | (1,800,000) |
| 3 | Taxable income | 600,000 |
| 4 | Tax on 600,000 @ 6% | 36,000 |
| — | Tax payable | 36,000 |
Only the LKR 600,000 above the threshold is taxed, and it all sits in the lowest band. Amali's annual income tax is LKR 36,000 — LKR 3,000 a month when spread across the year.
Example 3 — Middle income: LKR 3,600,000 a year
Scenario: Nimali earns LKR 3,600,000 a year (LKR 300,000 a month). No other income.
| Step | Item | Amount (LKR) |
|---|---|---|
| 1 | Assessable income | 3,600,000 |
| 2 | Less: personal relief | (1,800,000) |
| 3 | Taxable income | 1,800,000 |
| 4 | First 1,000,000 @ 6% | 60,000 |
| 5 | Next 500,000 @ 18% | 90,000 |
| 6 | Remaining 300,000 @ 24% | 72,000 |
| — | Tax payable | 222,000 |
The taxable income of LKR 1,800,000 spans three bands. Nimali's annual income tax is LKR 222,000 — approximately LKR 18,500 a month. Her effective rate on total income is 6.2%.
Example 4 — High income: LKR 6,000,000 a year
Scenario: Ruwan earns LKR 6,000,000 a year (LKR 500,000 a month). No other income.
| Step | Item | Amount (LKR) |
|---|---|---|
| 1 | Assessable income | 6,000,000 |
| 2 | Less: personal relief | (1,800,000) |
| 3 | Taxable income | 4,200,000 |
| 4 | First 1,000,000 @ 6% | 60,000 |
| 5 | Next 500,000 @ 18% | 90,000 |
| 6 | Next 500,000 @ 24% | 120,000 |
| 7 | Next 500,000 @ 30% | 150,000 |
| 8 | Remaining 1,700,000 @ 36% | 612,000 |
| — | Tax payable | 1,032,000 |
Ruwan's annual income tax is LKR 1,032,000 — LKR 86,000 a month. His effective rate on total income is 17.2%, even though the top marginal rate is 36%. The personal relief and the lower bands keep the effective rate well below the top marginal rate.
Run the numbers in the income tax calculator for your own income level.
How the relief changed from last year
For Y/A 2024/2025, the personal relief was LKR 1,200,000 a year (LKR 100,000 a month). From 1 April 2025, it rose to LKR 1,800,000 — an increase of LKR 600,000, or LKR 50,000 a month.
Who benefits most from the increase:
| Annual income (LKR) | Effect of higher relief |
|---|---|
| Up to 1,200,000 | No change — already paid nil tax before |
| 1,200,001 – 1,800,000 | Entire income now tax-free; previously paid some tax |
| 1,800,001 – 2,800,000 | Tax reduced — more income sheltered by the higher relief, all in the 6% band |
| Above 2,800,000 | Tax reduced at the base, but band-removal effect partially offsets the saving |
The relief increase worked alongside the removal of the old 12% band. For people whose income previously fell within the 12% band, the two changes interact — the higher relief reduces tax from the bottom, while the missing 12% band means that income is now taxed at either 6% (if it falls below the first band ceiling) or at 18% (if it falls above it). The net result depends on income level. See our 2025/2026 changes guide for the full comparison.
How the relief applies when you have multiple income sources
The personal relief applies to your total assessable income — not to each income source separately. This is the point most often misunderstood.
If you have a salary of LKR 1,500,000, rental income of LKR 240,000, and bank interest of LKR 120,000, your total assessable income is LKR 1,860,000. You subtract one personal relief of LKR 1,800,000. Taxable income is LKR 60,000, taxed at 6% — LKR 3,600. You do not get a separate LKR 1,800,000 against the rent and another against the salary.
How this interacts with withholding
Tax is often deducted at source before you see the income:
- Your employer deducts APIT from salary monthly.
- Your bank deducts Withholding Tax (WHT) at 10% on interest.
- A commercial tenant may deduct WHT at 10% on large rent payments.
These are all advance payments against your annual liability. When you file the annual return, you aggregate all income, apply one personal relief, run the bands, and then credit all the tax already withheld. If more was withheld than your final liability, the excess is refunded.
If your total income is below LKR 1,800,000 but WHT was deducted on interest
You are entitled to a refund of that WHT through the annual return. To prevent the deduction in the first place, file a Declaration of Non-Taxable Status with your bank — a self-declaration stating that your total income for the year is at or below the relief. The bank then withholds nothing on your interest.
Things to watch
- The relief is yearly, not monthly. If you only worked for part of the year — started a job in November, or resigned in August — you still get the full LKR 1,800,000 relief against whatever income you earned in that year of assessment.
- Non-residents do not get the relief. If you were present in Sri Lanka for fewer than 183 days and do not have a permanent place of abode here, you are non-resident and assessed differently.
- Two jobs do not mean two reliefs. One person, one relief of LKR 1,800,000, applied once across all income.
- The relief does not carry over. Unused relief from Y/A 2025/2026 cannot be transferred to Y/A 2026/2027. Each year of assessment stands alone.
- The return deadline for Y/A 2025/2026 is 30 November 2026. E-filing via the IRD e-Services portal (RAMIS) is mandatory. See our tax return filing guide for the step-by-step process.
- Other reliefs exist beyond the personal relief. Qualifying payments — life insurance premiums, contributions to approved pension funds, and others — can reduce your taxable income further.
Quick reference
- Personal relief Y/A 2025/2026: LKR 1,800,000 a year — up from LKR 1,200,000.
- Monthly equivalent: LKR 150,000 a month — used in APIT payroll calculations.
- Applied once: against total assessable income from all sources combined.
- Resident individuals only: 183+ days present in Sri Lanka, or permanent place of abode.
- One per person: two jobs, one relief; two working spouses, two separate reliefs.
- Tax bands after relief: 6% / 18% / 24% / 30% / 36% — the old 12% band is gone.
- Below the threshold: income at or below LKR 1,800,000 = nil income tax.
- Authority: Inland Revenue (Amendment) Act, No. 02 of 2025.
A note on the figures
All figures and rates on this page apply to the Year of Assessment 2025/2026 (1 April 2025 to 31 March 2026) under the Inland Revenue (Amendment) Act, No. 02 of 2025. Tax law can change; confirm critical figures against current IRD guidance before filing. TaxWise prepares IRD-ready schedules and calculations — you submit the return yourself. This page is educational and does not constitute legal or financial advice.
Frequently asked questions
What is the personal relief (tax-free amount) in Sri Lanka for 2025/2026?+−
The personal relief for Y/A 2025/2026 is LKR 1,800,000 a year, equivalent to LKR 150,000 a month. This is the amount every resident individual can earn before any income tax applies. It was increased from LKR 1,200,000 under the Inland Revenue (Amendment) Act, No. 02 of 2025, effective from 1 April 2025.
What is the monthly tax-free salary in Sri Lanka?+−
The monthly equivalent of the annual personal relief is LKR 150,000 a month. A salary at or below this amount from a primary employment generally produces no monthly APIT deduction. However, this is a payroll convenience — the true threshold is always the annual total of LKR 1,800,000, settled in the annual return, not a strict monthly limit.
Can I claim the personal relief on two jobs at the same time?+−
No. The personal relief of LKR 1,800,000 is applied once per person per year of assessment, against your total income from all sources. For APIT purposes, it is allocated to your primary employment only. Your secondary employer deducts APIT at a higher proportional rate without the relief. When you file your annual return, the one relief is applied across all income and the tax already withheld is credited.
Do I need to file a tax return if my income is below the personal relief?+−
If your total assessable income is LKR 1,800,000 or less, your income tax liability is nil and you generally do not have a mandatory filing obligation on income grounds alone. However, if any tax was withheld at source — for example, WHT on bank interest — you would need to file a return to claim a refund of that over-withheld tax. You should also file if requested to do so by the IRD. When in doubt, filing is always the safer course.