Learning how to calculate salaries in Egypt requires understanding three mandatory deductions applied in strict sequence. Egyptian payroll starts with gross salary, deducts 11% social insurance (capped between EGP 2,700 and EGP 16,700), subtracts the personal tax exemption (EGP 1,667 monthly), then applies progressive tax brackets ranging from 0% to 27.5%. Understanding how to calculate net income is essential for both employers and employees to ensure accurate payroll processing.
The most common error when you calculate salaries: applying tax to gross income instead of post-insurance income. This mistake inflates the tax burden by approximately 11% and creates compliance issues with Egyptian tax authorities.
Understanding the Difference Between Net Salary and Gross Salary
The distinction between gross and net salary is fundamental when you calculate salaries in Egypt. Gross salary net salary calculations require understanding each deduction component and the order in which they apply.
Salary Gross: The Total Compensation Package Before Deductions
Salary gross represents the total compensation stated in your employment contract before any deductions. Understanding gross salary and net salary differences is critical for accurate payroll processing.
Gross salary combines multiple compensation elements that Egyptian law uses to calculate both social insurance and income tax:
Basic salary (typically 60-70% of total compensation)
Fixed allowances for housing, transportation, and meals
Variable pay including bonuses and sales commissions
Taxable benefits such as company cars or housing
Not all allowances count equally for insurance purposes. Social allowances for marriage and children are exempt from social insurance calculations. Performance bonuses exceeding two months' basic salary face special caps. An employee with EGP 20,000 gross might have only EGP 16,000 counting as insurable gross.
Net Salary: Calculating Your Actual Take-Home Pay
Net salary represents what remains after all mandatory deductions are applied in the correct sequence. Learning how to calculate net salary accurately ensures compliance and prevents payroll disputes. Modern employee management software automates these calculations and reduces human error.
How do you calculate net income in Egypt?
Net Salary = Gross Salary - Social Insurance (11%) - Martyrs and Injured Fund (0.05%) - Income Tax (0-27.5%)
The Martyrs and Injured Fund (0.05% of gross) and social insurance are calculated first. Tax then applies to post-insurance income minus the personal exemption. Understanding this gross to net salary conversion is essential for accurate payroll.
An EGP 10,000 gross salary pays tax on approximately EGP 7,233 after insurance and exemption, demonstrating the importance of understanding gross to net pay calculations.
Net Salary and Gross Salary: Why It Matters for Your Contract
Egyptian Labor Law mandates that employment contracts specify gross salary, not net amounts. Net calculations are projections because progressive taxation increases as your cumulative annual income grows throughout the year.
Consider this scenario: A candidate requests EGP 15,000 net monthly. You offer EGP 19,500 gross based on January calculations. By June, progressive taxation reduces their take-home to EGP 14,200 because year-to-date income pushed them into higher tax brackets. This illustrates why understanding how to figure out net income over the full year is essential.
These complexities represent just one of many challenges of human resource management that Egyptian employers face when managing payroll and employee expectations.
The Essential Formula for Calculating Salary in Egypt
How to Correctly Calculate Salary: A Step-by-Step Breakdown
When you calculate salaries in Egypt, follow this mandatory sequence to ensure accurate gross to net income conversion:
Step 1: Apply Social Insurance
Determine insurable salary (minimum EGP 2,700, maximum EGP 16,700)
Deduct employee contribution: 11% of insurable salary
Calculate post-insurance income
Step 2: Apply Parallel Deductions
Martyrs and Injured Fund: 0.05% of gross salary (employee-paid)
Emergency Relief Fund: 0.25% of insurable salary (employer-paid, separate cost)
Step 3: Calculate Income Tax
Start with post-insurance income
Subtract personal exemption (EGP 1,667 monthly)
Apply progressive tax brackets to taxable amount
Step 4: Calculate Net Salary
Gross - Social Insurance - Martyrs and Injured Fund - Income Tax = Net Salary
This step-by-step approach shows how do i calculate net income correctly following Egyptian regulations.
How Do I Calculate My Total Salary? Including Allowances and Bonuses
Understanding how to calculate net income from total compensation requires identifying all salary components. Egyptian compensation packages typically include basic salary, fixed allowances, and variable pay, each treated differently for gross salary net salary calculations.
Egyptian packages structure compensation with specific percentages:
Basic salary: 60-70% of gross (foundation for calculations)
Fixed allowances: 20-30% (housing, transportation counted monthly)
Variable pay: 0-20% (bonuses, commissions with special caps)
The insurance cap significantly impacts higher earners. When you calculate net salary for employees earning above EGP 16,700, insurance applies only to the capped amount, not the full gross salary.
How Do I Calculate My Salary Rate? Determining Hourly and Monthly Pay
Converting between pay periods is essential when learning how to calculate salaries in Egypt for different employment types:
Monthly to daily: Divide by 30 (standard Egyptian month)
Daily to hourly: Divide by 8 (standard workday)
Egyptian Labor Law mandates premium overtime pay: 135% of base rate for hours 9-10, and 170% for hours beyond 10 daily.
Example: EGP 9,000 monthly = EGP 300 daily = EGP 37.50 hourly. Hour 9 overtime = EGP 50.63. Hour 11 overtime = EGP 63.75.
Step 1: Calculating Social Insurance (NOSI) Contributions
Applying the 2026 Social Insurance Minimum and Maximum Caps
Understanding social insurance caps is the first step in learning how do we calculate net income accurately. The National Organization for Social Insurance (NOSI) uses these 2026 brackets:
2026 Insurance Brackets:
Minimum insurable salary: EGP 2,700 monthly
Maximum insurable salary: EGP 16,700 monthly
Application rules:
Below EGP 2,700: Insurance calculated on EGP 2,700 minimum
Between EGP 2,700 and EGP 16,700: Insurance calculated on actual salary
Above EGP 16,700: Insurance calculated on EGP 16,700 maximum
Impact on different income levels:
An employee earning EGP 2,000 monthly still pays insurance on the EGP 2,700 minimum. Employee contribution: EGP 297. This represents 14.85% of actual earnings, creating a heavier burden on low-income workers.
An employee earning EGP 25,000 monthly pays insurance on the EGP 16,700 maximum. Employee contribution: EGP 1,837. This represents only 7.3% of actual earnings, creating a regressive effect.
The 11% Employee Deduction vs. 18.75% Employer Contribution
Social insurance splits between two parties, affecting how you calculate net salary for employees versus total employment costs for employers:
Employee Contribution:
11% of insurable salary
Deducted from paycheck
Appears on payslip
Employer Contribution (separate costs, not deducted from employee):
18.75% of insurable salary (social insurance)
0.25% of insurable salary (Emergency Relief Fund)
Total employer cost: 19% of insurable salary
Total contribution to NOSI: 30% of insurable salary (11% employee + 19% employer)
A comprehensive human resources management system in Egypt tracks both employee and employer contributions automatically, ensuring accurate monthly NOSI filings.
How to Calculate Net Salary After Social Security Deductions
Understanding gross to net pay after social insurance is critical. Here's how to calculate net salary at this stage:
Example 1: Mid-Range Salary (EGP 10,000 gross)
Calculation Step | Amount |
Gross salary | EGP 10,000 |
Insurable salary | EGP 10,000 |
Employee insurance (11%) | EGP 1,100 |
Post-insurance income | EGP 8,900 |
Example 2: High Salary (EGP 25,000 gross)
Calculation Step | Amount |
Gross salary | EGP 25,000 |
Insurable salary | EGP 16,700 (capped) |
Employee insurance (11%) | EGP 1,837 |
Post-insurance income | EGP 23,163 |
All income tax calculations start from post-insurance income, never from original gross salary. This is essential for accurate gross to net income calculations.
Step 2: Applying Individual Income Tax in Egypt
Understanding the 2026 Progressive Tax Brackets (0% to 27.5%)
Egypt uses progressive taxation where each bracket applies only to income within that specific range. Understanding these brackets is essential when learning how to calculate net income accurately. Note: Tax bracket thresholds may vary slightly depending on the source; always verify with official Egyptian Tax Authority (ETA) publications for your specific filing requirements.
Understanding the key differences between HRIS, HRMS, and HCM systems helps you choose the right solution for managing progressive tax calculations and year-to-date tracking.
2026 Egyptian Income Tax Brackets:
Annual Income Range | Tax Rate | Monthly Equivalent |
EGP 0 – 20,000 | 0% | EGP 0 – 1,667 |
EGP 20,001 – 55,000 | 10% | EGP 1,668 – 4,583 |
EGP 55,001 – 70,000 | 15% | EGP 4,584 – 5,833 |
EGP 70,001 – 200,000 | 20% | EGP 5,834 – 16,667 |
EGP 200,001 – 400,000 | 22.5% | EGP 16,668 – 33,333 |
EGP 400,001 – 1,200,000 | 25% | EGP 33,334 – 100,000 |
Above EGP 1,200,000 | 27.5% | Above EGP 100,000 |
An employee earning EGP 100,000 annually doesn't pay 20% on the entire amount. They pay 0% on the first EGP 20,000, then 10% on the next EGP 35,000, then 15% on the next EGP 15,000, then 20% only on the remaining EGP 30,000.
The Personal Exemption Threshold: Subtracting the EGP 20,000 Annual Allowance
Every Egyptian resident receives EGP 20,000 tax-free annually, equivalent to EGP 1,667 monthly. This exemption applies to post-insurance income and is a critical step in understanding how do you calculate net income.
Calculation order:
Gross salary: EGP 12,000
Social insurance (11%): EGP 1,320
Post-insurance income: EGP 10,680
Personal exemption: EGP 1,667
Taxable income: EGP 9,013
If post-insurance income falls below EGP 1,667 monthly, you pay zero income tax.
How to Calculate Net Income: Working Through the Tax Slices
This section demonstrates how do i calculate net income using progressive tax brackets with a complete real-world example.
Scenario: EGP 18,000 Gross Monthly Salary
Step 1: Social Insurance and Parallel Deductions
Gross salary: EGP 18,000
Insurable salary: EGP 16,700 (capped at maximum)
Social insurance (11%): EGP 1,837
Martyrs and Injured Fund (0.05% of gross): EGP 9
Post-insurance income: EGP 16,163
Step 2: Annualize and Apply Personal Exemption
Annual post-insurance: EGP 16,163 × 12 = EGP 193,956
Annual personal exemption: EGP 20,000
Annual taxable income: EGP 173,956
Step 3: Calculate Tax by Progressive Brackets
Tax Bracket | Income in Range | Rate | Tax Amount |
EGP 0 – 20,000 | EGP 20,000 (exempt) | 0% | EGP 0 |
EGP 20,001 – 55,000 | EGP 35,000 | 10% | EGP 3,500 |
EGP 55,001 – 70,000 | EGP 15,000 | 15% | EGP 2,250 |
EGP 70,001 – 200,000 | EGP 103,956 | 20% | EGP 20,791 |
Total Annual Tax | EGP 26,541 |
Step 4: Calculate Monthly Net Salary
Item | Amount |
|---|---|
Gross salary | EGP 18,000 |
Social insurance | - EGP 1,837 |
Martyrs and Injured Fund | - EGP 9 |
Income tax (EGP 26,541 ÷ 12) | - EGP 2,212 |
Final net salary | EGP 13,942 |
This example shows the complete gross to net salary conversion process for mid-range earners.
How to Figure Out Net Income for High-Earners (Above EGP 1.2M)
Understanding how to figure out net income for high earners requires careful attention to all progressive tax brackets.
Scenario: EGP 120,000 Gross Monthly (EGP 1.44M Annually)
Tax Calculation:
Post-insurance monthly: EGP 118,163 (EGP 120,000 - EGP 1,837)
Annual post-insurance: EGP 1,417,956
After exemption: EGP 1,397,956 taxable
Tax Bracket | Income in Range | Rate | Tax Amount |
EGP 0 – 20,000 | EGP 20,000 | 0% | EGP 0 |
EGP 20,001 – 55,000 | EGP 35,000 | 10% | EGP 3,500 |
EGP 55,001 – 70,000 | EGP 15,000 | 15% | EGP 2,250 |
EGP 70,001 – 200,000 | EGP 130,000 | 20% | EGP 26,000 |
EGP 200,001 – 400,000 | EGP 200,000 | 22.5% | EGP 45,000 |
EGP 400,001 – 1,200,000 | EGP 800,000 | 25% | EGP 200,000 |
Above EGP 1,200,000 | EGP 197,956 | 27.5% | EGP 54,438 |
Total Annual Tax | EGP 331,188 |
Monthly net salary:
Gross: EGP 120,000
Social insurance: EGP 1,837
Martyrs and Injured Fund: EGP 60
Income tax (EGP 331,188 ÷ 12): EGP 27,599
Net: EGP 90,504
Effective tax rate: 24.6% of gross
This demonstrates how do we calculate net income for high-income employees, showing the complete gross to net income conversion.
Note: The employer separately pays 18.75% social insurance (EGP 3,131) plus 0.25% Emergency Relief Fund (EGP 42) on the EGP 16,700 insurable amount, totaling EGP 3,173 in additional employer costs not deducted from the employee.
Gross to Net Salary: Comprehensive Payroll Calculations
Gross to Net Pay: Incorporating Medical Insurance and Private Funds
Understanding complete gross to net pay calculations requires accounting for both mandatory and voluntary deductions.
Beyond mandatory deductions, employers may offer:
Medical insurance: 1-3% of basic salary
Private pension funds: 3-5% based on company policy
Savings programs: Variable employee contributions
These deductions apply after tax calculation and require explicit written consent in employment contracts.
Example:
Item | Amount |
Gross salary | EGP 15,000 |
Social insurance | - EGP 1,650 |
Martyrs and Injured Fund | - EGP 7.50 |
Income tax | - EGP 1,850 |
Medical insurance (2%) | - EGP 300 |
Final net salary | EGP 11,192.50 |
How Do We Calculate Net Income for Part-Time and Freelance Workers?
Part-time employees follow the same rules as full-time employees when you calculate salaries. If monthly earnings fall below EGP 2,700, insurance is calculated on the EGP 2,700 minimum.
Part-time example showing how to calculate net salary:
Actual earnings: EGP 2,000 monthly
Insurance calculated on: EGP 2,700
Insurance deduction: EGP 297
Remaining before tax: EGP 1,703
Freelancers classified as independent contractors pay flat 12.5% self-employment tax instead of progressive brackets and register separately with NOSI.
Misclassifying employees as contractors to avoid insurance creates legal liability including back-payment of contributions, interest, and penalties.
Gross to Net Income: The Impact of the Martyrs and Victims Fund Deduction
Understanding gross to net income requires including the Martyrs and Injured Fund in your calculations. This fund supports families of police, military, and civil service personnel. The deduction is 0.05% of gross salary, calculated parallel to social insurance.
Calculation:
Gross Salary | Martyrs and Injured Fund (0.05%) |
EGP 10,000 | EGP 5 |
EGP 20,000 | EGP 10 |
EGP 50,000 | EGP 25 |
This appears as a separate line item on payslips and must be included when you calculate net income.
Tools for Salary Calculation: Salary Calculator Egypt 2026
Net Salary Calculator: Manual Calculation vs. Automated Tools
A net salary calculator simplifies the complex process of converting gross salary to net salary. Manual calculation using spreadsheets works for small teams but creates risk at scale.
Common errors include:
Using outdated caps (EGP 12,600 instead of EGP 16,700)
Applying tax to gross instead of post-insurance income
Miscalculating progressive brackets
Missing the EGP 1,667 monthly exemption
Forgetting the Martyrs and Injured Fund deduction
Payroll software eliminates calculation errors and integrates with Egyptian Tax Authority filing requirements. Small businesses should consider an HR system for small businesses in Egypt that balances affordability with essential payroll automation features.
Using a Salary Taxes Calculator for Accurate Monthly Filing
A salary taxes calculator ensures you calculate salaries in Egypt correctly for government filing. Egyptian tax authorities require Form 4 monthly filing with detailed information for every employee.
Required Calculator Outputs:
Employee gross salary
Insurable salary after applying caps
Employee social insurance (11%)
Employer social insurance (18.75%)
Emergency Relief Fund (0.25% - employer-paid)
Martyrs and Injured Fund (0.05% - employee-paid)
Post-insurance taxable income
Tax calculated per progressive bracket
Net salary
Year-to-date cumulative income and tax
Year-to-date tracking is critical. An employee earning EGP 8,000 monthly pays different tax in January versus December as cumulative income places them in higher brackets. Learn more about using an HRMS management system for business to automate year-to-date tracking and prevent costly tax calculation errors through real-time compliance updates.
Net Salary to Gross Salary Calculator: Negotiating Your Next Offer
A net salary to gross salary calculator helps when candidates request specific net amounts. Understanding how to calculate salaries in Egypt backwards (from net to gross) requires iteration.
Approximation method:
Estimate gross as desired net ÷ 0.72 (assumes 28% total deductions)
Calculate actual net from estimated gross
Adjust gross based on difference
Repeat until actual matches desired
Example:
Scenario | Amount |
Candidate requests net | EGP 25,000 |
Initial gross estimate | EGP 34,722 |
Calculated actual net | EGP 24,650 |
Adjusted gross | EGP 35,100 |
Final net | EGP 25,020 |
Provide candidates with 12-month projections showing how net salary changes as year-to-date income affects progressive brackets.
Implementation Steps
Audit Current Payroll
Check your last three months to ensure you calculate salaries correctly:
Are salaries above EGP 16,700 paying exactly EGP 1,837 in insurance?
Is tax calculated on post-insurance income (not gross)?
Is the EGP 1,667 monthly exemption applied before tax brackets?
Is the Martyrs and Injured Fund (0.05% of gross) included?
Does December tax reflect cumulative annual income?
Build Your Calculation System
Your payroll system needs these components to calculate net salary accurately:
Gross salary input with component breakdown
Automatic insurance caps (EGP 2,700 minimum, EGP 16,700 maximum)
Post-insurance income calculator
Martyrs and Injured Fund calculator (0.05% of gross)
Monthly personal exemption (EGP 1,667)
Progressive bracket formulas matching 2026 rates
Year-to-date income and tax tracking
Net salary output with detailed breakdown
Test with three salary levels: EGP 2,500, EGP 12,000, and EGP 30,000. Verify results match this guide's examples. Proper HR system implementation ensures your payroll calculations remain accurate and compliant from day one, reducing the risk of costly errors and regulatory penalties.
Stay Current with Regulatory Changes
Egyptian social insurance caps and tax brackets adjust periodically. The 2026 updates include:
Insurance maximum increased from EGP 12,600 to EGP 16,700
Insurance minimum increased from EGP 1,700 to EGP 2,700
Tax brackets restructured with adjusted percentages
Set January reminders to verify your system uses current rates. Subscribe to Egyptian Tax Authority and NOSI for regulatory updates. Always cross-reference calculations with official ETA sources, as some online calculators may use slightly different bracket interpretations.
Verify Your Calculations
Calculate net salary for five employees using 2026 formulas: three highest earners and two lowest earners. Compare results to current paychecks.
Monthly differences exceeding EGP 100 require investigation. Common issues include outdated insurance caps (costing EGP 250+ monthly per employee) or missing exemptions (adding EGP 300-600 monthly in excess tax).
Summary: To calculate salaries in Egypt correctly, apply deductions sequentially. Start with gross salary, subtract capped social insurance (11% of EGP 2,700 to EGP 16,700), deduct Martyrs and Injured Fund (0.05% of gross), then apply progressive tax (0% to 27.5%) to post-insurance income after the EGP 1,667 monthly exemption. Understanding how to calculate net income using this exact order ensures compliance with 2026 Egyptian payroll regulations and accurate gross to net salary conversions.