{"id":54513,"date":"2026-08-03T13:05:59","date_gmt":"2026-08-03T13:05:59","guid":{"rendered":"https:\/\/alprofitconsult.al\/?page_id=54513"},"modified":"2026-08-04T21:09:46","modified_gmt":"2026-08-04T21:09:46","slug":"payroll-tax","status":"publish","type":"page","link":"https:\/\/alprofitconsult.al\/en\/tatime\/pagat-dhe-kontributet\/tatimi-mbi-pagen\/","title":{"rendered":"How much tax is withheld from the paycheck?"},"content":{"rendered":"

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Home Page<\/a><\/span> | Tax legislation<\/a><\/span> | Salaries and contributions<\/a><\/span> | How much tax is withheld from the paycheck?<\/span><\/span><\/div>\n\n\n

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The payroll tax has two rates, 13.1% and 23.1%, but neither applies to the full salary. They apply to the amount remaining after deducting the portion of income that the law exempts from tax, and that portion is 600,000, 420,000, or 360,000 lek per year, depending on the level of income. For this reason, a salary of 50,000 lek per month is tax-free, while a salary of 80,000 lek has a monthly tax of 6,500 lek.<\/p>\n\n\n\n

This page explains the annual scheme behind monthly withholding, deductions and how they are requested, how bonuses and in-kind benefits are treated, dual employment, and year-end recalculation. Insurance contributions, which are withheld separately from tax, are covered on their own page.<\/p>\n\n\n\n

Read also: How much is paid for social security and health insurance?<\/a>.<\/p>\n\n\n\n

Short answer<\/h2>\n\n\n\n

Two different items are withheld from the salary: personal income tax and the employee's contribution of 11.21%. The tax has rates of 13% and 23%, while the contribution has a single rate for everyone.<\/p>\n\n\n\n

The 13% tax rate applies to annual taxable income up to 2,040,000 lek, and the 23% rate only on the excess. Taxable income is annual gross salary minus allowable deductions, not the full gross salary.<\/p>\n\n\n\n

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Salary: 80,000 lek\u00eb per month. Over a year, that amounts to 960,000 lek\u00eb. The basic deduction for this level is 360,000 lek\u00eb, so the taxable income is 600,000 lek\u00eb. The 13% tax yields 78,000 lek per year, or 6,500 lek per month. The employee contribution is 11.2% of 80,000 lek, or 8,960 lek. The net salary is 64,540 lek.<\/p>\n<\/blockquote>\n\n\n\n

Annual scheme, 13% and 23%<\/h2>\n\n\n\n

The law bases payroll tax on an annual basis, even when withholding is done monthly. This is the point that clarifies almost every question, because monthly withholding is just one twelfth of the annual obligation.<\/p>\n\n\n\n

Annual taxable income<\/th>The<\/th><\/tr>
Up to 2,040,000 lek<\/td>13%<\/td><\/tr>
The portion above 2,040,000 lek<\/td>23%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Rule 23% does not raise the tax on the entire salary. It applies only to amounts that exceed the threshold, just like the tax brackets on personal income.<\/p>\n\n\n\n

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Salary 250,000 lek\u00eb per month, so 3,000,000 lek\u00eb per year. The 360,000-lek\u00eb deduction lowers the base to 2,640,000 lek\u00eb. The first portion, 2,040,000 lek\u00eb, is taxed at 13% and yields 265,200 lek\u00eb. The excess, 600,000 lek, is taxed at 23% and yields 138,000 lek. The annual tax is 403,200 lek, or 33,600 lek per month, and the effective rate is 13.41% of gross pay, not 23%.<\/p>\n<\/blockquote>\n\n\n\n

Read also: Profit tax rates and thresholds for comparison between wages and business.<\/a>.<\/p>\n\n\n\n

Base-reducing discounts<\/h2>\n\n\n\n

Basic discount based on income level<\/h3>\n\n\n\n

The basic deduction is not the same for everyone. It decreases the higher the level of annual income, in three tiers.<\/p>\n\n\n\n

Annual income<\/th>Base discount<\/th><\/tr>
Up to 600,000 lek<\/td>600,000 lek<\/td><\/tr>
From 600,000 to 720,000 lek<\/td>420,000 lek<\/td><\/tr>
Over 720,000 lek<\/td>360,000 lek<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

The first bracket is why the minimum wage isn't taxed. A minimum wage of 50,000 lek per month amounts to 600,000 lek per year, and the 600,000-lek deduction covers it in full.<\/p>\n\n\n\n

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Attention. Moving from one bracket to the next is a step, not a slide. With annual income of 600,000 lek, the tax is zero. With income just above 600,000 lek, the deduction falls to 420,000 lek, so a taxable base is created and tax becomes payable. This is a feature of the law, not a calculation error.<\/p>\n<\/blockquote>\n\n\n\n

Children's discount<\/h3>\n\n\n\n

For each dependent child under 18, a deduction of 48,000 lek per year is allowed. The deduction is claimed; it is not applied automatically, and only one parent can claim it.<\/p>\n\n\n\n

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Salary of 80,000 lek per month and two children under 18. Annual income of 960,000 lek. The basic deduction of 360,000 lek plus 96,000 lek for two children totals 456,000 lek. The taxable base falls to 504,000 lek\u00eb, and at a 13% rate the tax amounts to 65,520 lek\u00eb per year, or 5,460 lek\u00eb per month. The saving compared to a case without children is 12,480 lek\u00eb per year.<\/p>\n<\/blockquote>\n\n\n\n

Education discount<\/h3>\n\n\n\n

Expenses for children's education are deductible up to 100,000 lek\u00eb per year, provided that annual income does not exceed 1,200,000 lek\u00eb. Above this income level, the deduction is not allowed.<\/p>\n\n\n\n

How to request discounts<\/h3>\n\n\n\n

The deductions are requested once a year by submitting a request to the employer acting as the withholding agent, and are applied as one-twelfth per month. If the request is not made, the basic deduction based on income level applies regardless, while the child and education deductions lose their monthly effect and must be claimed on the annual individual return.<\/p>\n\n\n\n

Read also: Payroll agent and personal status declaration<\/a>.<\/p>\n\n\n\n

An employee with two employers requests a deduction from only one of them. The duplicate request results in withholding that is too low and a difference to be paid at the end of the year.<\/p>\n\n\n\n

Read also: Who files the DIVA declaration and how discounts are obtained<\/a>.<\/p>\n\n\n\n

From the annual plan to the monthly subscription<\/h2>\n\n\n\n

The employer doesn't wait until the end of the year. He withholds tax every month, applying one-twelfth of the deduction and the same rates. For the same salary throughout the year, the monthly amount is exactly the annual obligation divided by twelve.<\/p>\n\n\n\n

The monthly deduction from the third bracket is 30,000 lek, so 360,000 lek divided by twelve. Therefore, for salaries above 60,000 lek\u00eb, the monthly tax is calculated as 13% of the difference between the gross salary and 30,000 lek\u00eb, up to an annual taxable income of 2,040,000 lek\u00eb.<\/p>\n\n\n\n

Gross monthly salary<\/th>Monthly tax<\/th>How is it extracted?<\/th><\/tr>
50,000 lek<\/td>zero lek<\/td>The 600,000 lek discount covers the annual income.<\/td><\/tr>
60,000 lek<\/td>3,250 lek<\/td>720,000 minus 420,000 equals 300,000, with 13% giving 39,000 per year.<\/td><\/tr>
80,000 lek<\/td>6,500 lek<\/td>960,000 minus 360,000 equals 600,000, and at 131 TP3T it yields 78,000 per year.<\/td><\/tr>
120,000 lek<\/td>11,700 lek<\/td>1,440,000 minus 360,000 equals 1,080,000, and 13% yields 140,400 per year.<\/td><\/tr>
200,000 lek<\/td>22,100 lek<\/td>2,400,000 minus 360,000 equals 2,040,000, the 13% rate limit.<\/td><\/tr>
250,000 lek<\/td>33,600 lek<\/td>265,200 with 131 TP3T plus 138,000 with 231 TP3T, totaling 403,200 per year.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

When the salary changes during the year, or when an employee starts work mid-year, the monthly withholding and the annual liability may not match. The difference is adjusted on the annual individual return when it is required.<\/p>\n\n\n\n

Read also: Step-by-step calculation with gross, net, and cost tables.<\/a>.<\/p>\n\n\n\n

The tax base is the gross salary.<\/h2>\n\n\n\n

Payroll tax is calculated on gross pay. Employee contributions are not deducted before calculating the tax, so the 11.21% contribution and the tax withholding start from the same amount and are not dependent on each other.<\/p>\n\n\n\n

This is one of the most confusing points in practice, because on the pay stub both withholdings appear together and create the impression that the second one is calculated on what remains of the first.<\/p>\n\n\n\n

Bonuses, rewards, and in-kind benefits<\/h2>\n\n\n\n

Employment income is not limited to basic pay. The law covers any remuneration arising from the employment relationship, and in-kind benefits are valued at market value.<\/p>\n\n\n\n

\u2714 Awards, allowances, and year-end bonuses are included in taxable income for the month in which they are paid.
\u2714 Natural benefits, such as a vehicle for personal use or housing, are valued at market value.
\u2714 The employer's payment for life and health insurance is treated separately and has its own limits under business expenses.
\u2714 Some income is expressly excluded by law and does not count toward the base.<\/p>\n\n\n\n

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Salary of 80,000 lek per month and a 100,000 lek bonus in December. In December the monthly base becomes 180,000 lek. The monthly tax is calculated at 13% of the difference between 180,000 and 30,000 lek, i.e. 19,500 lek, instead of the 6,500 lek of a normal month. The employee's contribution for December is 11.2% of 180,000 lek\u00eb, i.e., 20,160 lek\u00eb.<\/p>\n<\/blockquote>\n\n\n\n

The large bonus may exceed the Social Security contribution limit for that month. This is addressed on the contributions page.<\/p>\n\n\n\n

Dual employment<\/h2>\n\n\n\n

When a person receives wages from two employers, each employer withholds tax only on the wages it pays. The combined withholdings are almost always less than the actual liability, either because the basic deduction is applied twice or because the second wage remains below the taxable threshold.<\/p>\n\n\n\n

The adjustment is made on the annual individual declaration, which is mandatory when an individual has two employers.<\/p>\n\n\n\n

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An employee earns 60,000 lek from employer A and 40,000 lek from employer B. A withholds 3,250 lek per month, so 39,000 lek per year. B pays zero, because 480,000 lek\u00eb per year is covered by the 600,000 lek\u00eb deduction. The actual liability is calculated on the total, so 1,200,000 lek\u00eb minus 360,000 lek\u00eb equals 840,000 lek\u00eb, and at 13% it amounts to 109,200 lek\u00eb. The difference to be paid with the annual return is 70,200 lek\u00eb.<\/p>\n<\/blockquote>\n\n\n\n

Read also: Special employment cases, including dual employment and short-term contracts.<\/a>.<\/p>\n\n\n\n

Who bears the tax and when does he pay it?<\/h2>\n\n\n\n

The employer is the withholding agent. He calculates the tax, withholds it from the salary, reports it on the payroll, and pays it into the tax administration's account. The employee has no separate payment obligation, except in cases where an individual annual return must be filed.<\/p>\n\n\n\n

The list of entities must be submitted by the 20th of the following month. Individual traders and self-employed persons who have employees must submit it by the 20th after the end of each quarter.<\/p>\n\n\n\n

Read also: How is the payroll declared each month in e-Filing?<\/a>.<\/p>\n\n\n\n

The mistakes we see<\/h2>\n\n\n\n