Income tax proposals for 2026-27: majority of taxpayers will pay less income tax than in rest of the UK

Changes to the basic and intermediate rate income tax thresholds will protect lower-income households in 2026-27, Finance Secretary Shona Robison has announced.

The Finance Secretary also confirmed there would be no changes to rates or the number of tax bands in the coming financial year.

In 2026-27, if the Budget is passed, the Basic and Intermediate rate thresholds will increase by 7.4% to £16,537 and £29,526 respectively.

The Higher, Advanced and Top rate thresholds will remain at £43,662, £75,000 and £125,140 respectively. 

Ms Robison said:  

“By raising the Basic and Intermediate rate thresholds by substantially more than inflation, this Budget once again provides tax support for low and middle-income earners. 

“It also means that the clear majority of taxpayers in Scotland can expect to pay less income tax than in the rest of the UK.

“By delivering fair and progressive tax policies, we continue to deliver higher investment in the NHS and policies like free tuition not available anywhere else in the UK.”

Background 

The Scottish Parliament must pass a Scottish Rate Resolution each year to set the rates and bands for Scottish Income Tax. A draft of the motion setting out the proposed Scottish Income Tax rates and bands for 2026-27, and an accompanying explanatory note, has been published alongside the Budget. Scottish Budget 2026 to 2027 

The Scottish Fiscal Commission forecast that Income Tax will raise £21,508 million in 2026-27, and that taxpayers earning less than £33,500 will pay less income tax in Scotland than they would in the rest of the UK. The median gross income figure is £31,150 and the median income net of deductions is £30,350.

The Scottish Fiscal Commission estimates Scottish Government income tax policy choices since devolution will raise up to an additional £1.8 billion in 2026-27 compared to if we had matched UK Government policy.

Scottish Government analysis indicates around 55 per cent of Scottish taxpayers can expect to pay less income tax in 2026-27 than they would elsewhere in the UK based on gross income data, rising to 57 per cent when based on taxable income after deductions such as pension contributions.