Majority pay less income tax than in rest of the UK.
Income tax rates have been frozen for the rest of this Parliament and more of people’s money will be taxed at the starter and basic rates.
Finance Secretary Shona Robison set out the decisions as part of the 2025-26 Scottish Budget, as she also published Scotland’s Tax Strategy.
The Finance Secretary also committed to freezing the number of tax bands, providing certainty to taxpayers and businesses.
As a result, more than half of taxpayers pay less than they would elsewhere in the UK and the Strategy commits to this being maintained for the remainder of this Parliament.
In 2025-26, Income Tax proposals will see:
- the Basic rate and Intermediate rate thresholds increase by 3.5%, effectively twice the rate of inflation, to £15,397 and £27,491 respectively
- the Higher, Advanced and Top rate thresholds will be maintained at £43,662, £75,000 and £125,140 respectively
I have decided to provide tax support for low and medium-income earner.
THE FINANCE SECRETARY
The Basic and Intermediate rate thresholds will increase this year by 3.5%, effectively twice the rate of inflation.
That means more of people’s money will be taxed at the starter and basic rates.
It also means that the majority of taxpayers in Scotland will continue to pay less income tax than in the rest of the UK. This will remain true until at least the end of this Parliament while, as with the UK, thresholds for Higher, Advanced and Top rates will be maintained at their current levels.
Overall, the income tax decisions we have taken since devolution have delivered up to £1.7 billion more in 2025-26 than if we had followed UK Government policies.
Setting out our plans now for the rest of this parliament will provide certainty, allowing taxpayers to better manage their finances and businesses to plan and make investment decisions with confidence.
Background
Scotland’s Tax Strategy: Building on our Tax Principles – gov.scot sets out the Scottish Government’s medium-term ambitions for how the tax system should develop to support the delivery of government priorities.
The Scottish Fiscal Commission forecast that Income Tax will raise £20.5 billion in 2025-26, an increase of 3% compared to their most recent forecast in December 2023.
