Ghana's New PAYE Schedule (Act 1178): What Every Employer Must Do Right Now
On 23 September 2026, the Ghana Revenue Authority (GRA) issued an official communique confirming that the revised PAYE schedule under the Income Tax (Amendment) Act, 2026 (Act 1178) took effect from 1 September 2026. For employers across Ghana who process payroll, that single sentence creates an immediate and serious operational problem.
September payrolls had already been processed. Salaries had already been paid. Payslips had already been issued. Payroll journals had already been posted. PAYE liabilities had already been recognised and in many cases remitted to GRA based on the previous tax bands.
This guide sets out exactly what Act 1178 changes, what the constitutional and legal background means for the effective date, what employers now face practically, and what you need to do with your payroll systems right now.
What Is the Income Tax (Amendment) Act, 2026 (Act 1178)?
Act 1178 amends the Income Tax Act, 2015 (Act 896) by revising the First Schedule, which governs the graduated personal income tax rates for resident individuals. The changes were introduced as part of the government's social protection agenda, with three headline objectives:
Increasing the annual tax-free threshold from GHS 5,880 to GHS 7,056, raising the monthly equivalent from GHS 490 to GHS 588
Exempting the National Daily Minimum Wage from income tax entirely, recognising the 2026 minimum wage of GHS 21.77 per day
Raising the presumptive tax turnover threshold for micro and small businesses from GHS 500,000 to GHS 750,000, bringing more SMEs under a simplified compliance framework
The Bill was laid before Parliament by the Minister for Finance on 31 July 2026, passed on 29 July 2026, and assented to by President John Dramani Mahama on 26 August 2026.
The Revised PAYE Bands Under Act 1178 (Effective 1 September 2026)
The following are the revised monthly and annual PAYE bands that GRA has confirmed as effective from 1 September 2026:
Monthly PAYE Bands (Act 1178)
First GHS 588: 0% (tax-free, up from GHS 490)
Next GHS 110 (GHS 588 to GHS 698): 5%
Next GHS 130 (GHS 698 to GHS 828): 10%
Next GHS 3,000 (GHS 828 to GHS 3,828): 17.5%
Next GHS 16,172 (GHS 3,828 to GHS 20,000): 25%
Next GHS 30,000 (GHS 20,000 to GHS 50,000): 30%
Above GHS 50,000: 35%
Annual PAYE Bands (Act 1178)
First GHS 7,056: 0% (tax-free, up from GHS 5,880)
Next GHS 1,320: 5%
Next GHS 1,560: 10%
Next GHS 36,000: 17.5%
Next GHS 192,000: 25%
Next GHS 360,000: 30%
Above GHS 600,000: 35%
The key change most employees will notice is the increase in the tax-free threshold. An employee previously paying PAYE on income above GHS 490 per month now pays nothing on income up to GHS 588 per month. For most Ghanaian salary earners, this produces estimated annual savings of between GHS 300 and GHS 600, depending on their income level.
The Legal Problem: When Did Act 1178 Actually Come Into Force?
This is the heart of the compliance crisis that has unfolded in September 2026, and it requires an honest engagement with Ghana's constitutional framework.
Article 106(11) of the 1992 Constitution
Article 106(11) of the Constitution of Ghana is clear: a bill assented to by the President does not come into force unless it has been published in the Gazette. Presidential assent alone is a necessary but not sufficient condition for an Act to be operative law.
The President assented to Act 1178 on 26 August 2026. But the date of Gazette publication, which is the legally operative commencement date, was not communicated to employers or the public by GRA at the time of assent or in the days that followed.
What This Meant for Employers in Practice
Between 26 August 2026 and 23 September 2026, employers faced a genuine legal and operational dilemma. They knew assent had been granted. They did not know the Gazette publication date, which determines the legal commencement date. They could not establish from GRA's public communications when they were legally required to implement the new bands.
As confirmed by CRS International, as recently as 7 September 2026, the effective date for payroll implementation remained unconfirmed. Their guidance to employers at that time was clear: prepare your systems, monitor for Gazette publication, and do not apply the new bands until the commencement date is confirmed.
Employers should prepare payroll systems for the revised resident PAYE bands, monitor for publication of the Act in the Gazette, and obtain confirmation of the commencement date before applying the new tax table or making retrospective payroll adjustments. Effective date: not yet confirmed.
GRA's own senior officials, when contacted by payroll professionals for clarification during this period, were unable to confirm the implementation date. If the authority responsible for administering the tax could not confirm the date to enquiring employers, the argument that employers should simply have known and acted is not sustainable.
The Practical Crisis: What Employers Now Face
GRA's 23 September 2026 communique creates immediate operational difficulties for every employer in Ghana that has already completed their September payroll.
Employers Who Processed September Payroll Under the Old Bands
Any employer that processed September payroll using the pre-Act 1178 tax bands has understated each affected employee's net pay and overstated their PAYE deduction relative to what the new schedule requires. Strictly speaking, Act 1178 requires the new bands to apply from 1 September 2026.
The practical questions this creates:
Must employers reopen September payroll and recalculate PAYE for every affected employee?
Must corrected payslips be issued showing the reduced PAYE and increased net pay?
Must posted payroll journal entries be reversed and reposted?
How is the difference between old and new PAYE handled: as a credit on the October PAYE return, a direct refund to employees, or a carry-forward?
What happens to employers who have already remitted their September PAYE to GRA under the old rates?
At the time of writing, GRA has not issued clear, written guidance on any of these points.
Employers Who Held Off Pending Clarification
Employers who were waiting for official GRA guidance before implementing the new bands, which was the legally prudent approach given the constitutional position on Gazette publication, now face the opposite problem: they may be assessed as non-compliant with a September 2026 obligation they had no way to confirm in advance.
What the Law Requires: Employer Obligations Under Act 1178
Regardless of the communication failures that have created this situation, the legal obligations for employers going forward are clear:
Update your PAYE computation tables immediately: the new Act 1178 bands must now be applied to all payroll from September 2026 onwards. If your October payroll has not yet been processed, it must use the revised bands.
Seek written guidance from GRA on September 2026 correction: before reopening September payroll, get written confirmation from GRA on how the retrospective adjustment should be handled. Do not make changes based on verbal assurances.
Document your good-faith compliance position: if you processed September payroll under the old bands in the absence of GRA guidance, document this clearly: the dates you sought clarification, from whom, and what you were told. This record protects you if GRA raises a compliance query.
Update your payroll system: whether you process payroll manually, through a spreadsheet, or through software such as ERPNext, QuickBooks, or Sage, the new PAYE bands must be configured before your next payroll run.
Communicate with employees: inform affected employees that the new bands apply from September 2026 and explain what this means for their net pay. Employees whose September salaries were processed under the old bands may be owed a net pay adjustment.
The GRA's Communication Failure and What It Means for Tax Compliance
It is necessary to state this directly: the communication gap between the passage of Act 1178 and GRA's 23 September communique represents a failure of tax administration that has real consequences for Ghanaian employers and employees.
Tax compliance requires predictability. Predictability requires timely, accessible, official communication. When a significant change to PAYE rates is enacted, employers need:
Immediate Gazette publication confirmation and the commencement date communicated publicly on the day of or immediately following Gazette publication
Clear implementation guidance covering how mid-year payroll changes should be handled, whether retrospective adjustments are required and how, and what the process is for any PAYE reconciliation
Sufficient lead time: ideally, employers should have at least one full payroll cycle of notice before a new PAYE schedule takes effect, to allow system updates, employee communications, and payroll testing
Communication through accessible channels: not through senior official calls or Taxpayer Service Centre visits, but through GRA's website, official social media, and direct notice to registered employers
The suggestion that employers could simply contact Taxpayer Service Centres or call GRA officials to establish when a new law takes effect is not a compliance framework. It is an invitation to chaos. As confirmed by payroll professionals who contacted GRA directly during the period in question, senior officials within the Authority itself could not provide the implementation date. This is not a criticism of those individuals. It is evidence of a systemic communication gap that must be addressed.
We cannot continuously demand voluntary tax compliance without making the compliance process predictable, accessible and transparent. Taxpayers need timely information, clear implementation guidelines and sufficient time to adjust their systems.
This is not a controversial position. It is the foundational principle of any effective tax compliance framework.
What ERPNext Users Need to Do Right Now
For businesses running payroll through ERPNext configured by Powersoft Systems, the update to Act 1178 PAYE bands is a straightforward system configuration change. If your ERPNext payroll was configured by Powersoft Systems, contact our support team to arrange the immediate update of your PAYE salary components and tax slabs to the new Act 1178 schedule.
If you manage your own ERPNext configuration, the update requires changing the income tax slab linked to your resident employee salary structure. The new monthly tax-free threshold is GHS 588, up from GHS 490. All bands above the nil-rate band must be updated to reflect Act 1178's revised schedule.
Do not process October payroll under the old bands. The legal obligation from 1 September 2026 is the Act 1178 schedule, regardless of when GRA confirmed it.
The Broader Lesson for Ghanaian Employers
The Act 1178 communication failure is not the first time Ghanaian employers have found themselves in the position of needing to act on tax law changes without timely official guidance. It is, however, one of the clearest and most consequential examples, because it affects every employer in the formal sector and every employee whose PAYE is deducted at source.
For employers, the lesson is operational: your payroll system must be capable of rapid reconfiguration when tax schedules change, and your team must have a process for monitoring legislative changes proactively rather than waiting for GRA communication that may come too late to be useful.
For GRA, the lesson is systemic: the authority cannot demand employer compliance while creating an environment where the information needed for that compliance is inaccessible. The solution is not more Taxpayer Service Centre signage. It is a functioning communications infrastructure that notifies employers through official channels, immediately upon Gazette publication, with clear and complete implementation guidance.
Until that infrastructure exists, Ghanaian employers will continue to navigate tax law changes with incomplete information, making their best efforts at compliance in conditions that make compliance unnecessarily difficult.
Powersoft System keeps your ERPNext payroll system current with Ghana's evolving tax legislation. If your PAYE tables need updating for Act 1178, or if you want to understand how ERPNext handles mid-year payroll schedule changes, contact our team at powersoftsystem.com. We configure, maintain, and support ERPNext payroll for Ghanaian employers across all sectors.
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