Personal Income Tax Rates in Indonesia: Bands and Allowances
Personal income tax rates in Indonesia: the five bands, the tax-free allowance that comes off first, how non-residents are taxed, and the small-business rate.
References (4)
- UU No. 7 Tahun 2021, amending the Income Tax Law. Article 7(1), the tax-free allowance. Article 7(2), the allowance follows the position at the start of the tax year. Article 7(2a), the first IDR 500 million of an individual's small-business turnover is not taxed. Article 17(1)(a), the five rates for resident individuals. Article 17(2) to (4), how the rates and bands can change, and rounding taxable income down to the full thousand. Under Article 17(1) of UU No. 7 Tahun 2021 itself, these rules apply from the 2022 tax year.
- UU No. 6 Tahun 2023, Article 111, amending the Income Tax Law. Article 2(3)(a), the three tests of residence. Article 26(1)(d) and (5), withholding from a non-resident's pay for work, and when that tax is final.
- PP No. 55 Tahun 2022, as amended by PP No. 20 Tahun 2026, which was promulgated and took effect on 22 April 2026. Article 56(3) and (4), income from a profession is excluded from the final tax. Article 57, who may use it and how an individual leaves it. Article 58, how the turnover limit is counted. Article 59, the time limit, is deleted. Article 60(2) and (3), the first IDR 500 million of turnover. Article 61, crossing the limit during a year. Article II of PP No. 20 Tahun 2026 sets the transition.
- PP No. 58 Tahun 2023, Article 2(1), and PMK No. 168 Tahun 2023, Article 15. The monthly effective rate withheld from pay, and the settlement at the five rates in the last month of the year.
Personal income tax rates in Indonesia run from 5% to 35% for a resident, in 5 bands, and they apply to taxable income after a tax-free allowance of IDR 54 million a year, with more for a spouse and dependants. For a non-resident paid for work here, the payer withholds 20% of the gross instead. An individual running a small business may pay a final tax of 0.5% of turnover in place of the bands.
The five income tax rates in Indonesia
These rates have applied since the 2022 tax year (Income Tax Law, Article 17(1)(a), as amended by UU No. 7 of 2021). They apply to resident individuals.
| Rate | |
|---|---|
| Up to IDR 60,000,000 | 5% |
| Over IDR 60,000,000 to 250,000,000 | 15% |
| Over IDR 250,000,000 to 500,000,000 | 25% |
| Over IDR 500,000,000 to 5,000,000,000 | 30% |
| Over IDR 5,000,000,000 | 35% |
Each rate applies only to the slice of income inside its band. Moving into a higher band does not raise the tax on the income below it, so the rate on your top slice is always higher than the rate on your income as a whole.
| Description | IDR |
|---|---|
| First IDR 60,000,000 5% × 60,000,000 | 3,000,000 |
| Next IDR 190,000,000 15% × 190,000,000 | 28,500,000 |
| Next IDR 50,000,000 25% × 50,000,000 | 12,500,000 |
| Tax for the year | 44,000,000 |
The top slice here is taxed at 25%, but the tax for the year is an average of about 14.7% of the whole. Before the rates are applied, taxable income is rounded down to the full thousand rupiah (Article 17(4)).
The tax-free allowance comes off first
Before any rate applies, a tax-free allowance (penghasilan tidak kena pajak) is taken off your net income for the year (Income Tax Law, Article 7(1), as amended by UU No. 7 of 2021).
Your marital status and dependants are taken as they stand on the first day of the tax year (Article 7(2)). A marriage or a child during the year counts from the following year. How a married couple’s income is taxed, together or separately, is covered in our guide to the annual personal tax return. Which status and category your employer uses is in our guide to PPh 21, the income tax withheld from pay.
What your employer takes each month
The monthly deduction from your pay uses an effective rate, and it is an instalment rather than the rate you finally pay. In December, or in the month you leave, your employer works out the tax for the year on the five bands and deducts the difference (PP 58/2023, Article 2(1); PMK 168/2023, Article 15). The monthly rates and how they are applied are in the same PPh 21 guide.
When we run your company’s payroll, we withhold the tax each month and reconcile it at the year end, so the December figure holds no surprises.
If you are not resident
The bands apply only to residents. You are resident for tax if you live in Indonesia, are here for more than 183 days in any twelve months, or are here during a tax year and intend to stay (Income Tax Law, Article 2(3)(a), as amended by UU No. 6 of 2023). Our guide to moving to Indonesia explains how a stay permit bears on those tests.
The payer withholds 20% of a non-resident’s gross pay for work in Indonesia, and that tax is final: there are no bands and no allowance (Article 26(1)(d) and (5)). A tax treaty with your home country can reduce it, and our personal tax work includes advice on the treaty position.
If you later become resident, the tax withheld is no longer final and counts towards the tax for that year (Article 26(5)(b)). The year you arrive is covered in our guide to the annual return.
Running a business on your own: the 0.5% final tax
An individual whose business turnover is no more than IDR 4.8 billion a year can pay a final tax of 0.5% of gross turnover instead of the bands on that income (PP 55/2022, Articles 56 and 57, as amended by PP 20/2026). The first IDR 500 million of turnover each year is not taxed at all, counted from the first month of the year (Income Tax Law, Article 7(2a); PP 55/2022, Article 60(2) and (3)).
| The 0.5% final tax | The five bands | |
|---|---|---|
| Charged on | Gross business turnover | Taxable income after the tax-free allowance |
| Rate | 0.5%, final | 5% to 35% |
| Tax-free part | The first IDR 500 million of turnover each year | The tax-free allowance |
| Who can use it | Individuals with turnover up to IDR 4.8 billion, not on fees from a profession | Every resident individual |
Fees from a profession do not qualify
Income from independent professional work never uses the final tax. It is taxed at the five bands (PP 55/2022, Article 56(3)(a) and (4), as amended). The excluded work includes:
- lawyers, accountants and consultants
- doctors
- musicians, performers and online content creators
- advisers and trainers
- agents
Those fees still count towards the IDR 4.8 billion test. It looks at the previous year’s turnover, including professional fees, turnover earned abroad, and the turnover of any single-founder company you set up (Articles 57(2)(e) and 58(1)(a), as amended).
Choosing the bands is a one-way step
You can move from the 0.5% final tax to the five bands by notifying the tax office. Once you do, or once your turnover passes IDR 4.8 billion in a year, the final tax is not available again in later years (PP 55/2022, Article 57(3) and (4), as amended). It is a decision worth talking through before you make it, and our personal tax work covers it, along with the final tax filings themselves. The old limit on how many years an individual could use the final tax has gone: PP 20/2026 deleted Article 59.
What this means for you
If you are employed, you pay the income tax rates in Indonesia through your payroll each month, and the year is settled on the five bands, then reported in one annual return. If you trade on your own, you pay 0.5% only on turnover above the first IDR 500 million. The one decision worth advice is leaving the final tax.