The Scottish government has announced changes to two of Scotland’s six income tax bands in its draft budget for 2026–27.
Under the proposals, the thresholds for the starter, basic and intermediate rates will rise by 7.4%, effectively cutting tax for lower earners. However, the thresholds for the higher, advanced and top rates will be frozen at current levels until at least 2028–29. As a result, anyone earning more than £43,663 will continue to pay the higher rate of 42%.
Finance Secretary Shona Robison said the changes mean 55% of Scottish taxpayers will pay less income tax next year than they would if they lived elsewhere in the UK.
Tax consultants Deloitte have analysed what the changes will mean for workers at different income levels.
Income tax bands in Scotland, 2026–27
- Personal allowance: First £12,570 tax free
- Starter rate: £12,571–£16,537 at 19%
- Basic rate: £16,538–£29,526 at 20%
- Intermediate rate: £29,527–£43,662 at 21%
- Higher rate: £43,663–£75,000 at 42%
- Advanced rate: £75,001–£125,140 at 45%
- Top rate: Over £125,140 at 48%
- No personal allowance applies to incomes above £125,140.
Lower earners: £16,000
A worker earning £16,000 will pay tax only on £3,430 after the personal allowance. Tax at the starter rate comes to £651.70, with national insurance of £274.40, leaving take-home pay of £15,073.90.
This is £6.03 less in income tax than in 2025–26. Compared with someone earning the same amount elsewhere in the UK, a Scottish resident would pay £34.30 less tax. This band includes many part-time and minimum wage workers.
Medium earners: £33,000
After the personal allowance, £20,430 is taxable. Total income tax comes to £4,081.07, with national insurance of £1,634.40, leaving take-home pay of £27,284.53.
This represents a £31.75 tax reduction compared with 2025–26. A Scottish taxpayer on this salary pays £4.93 less than someone elsewhere in the UK. This income level includes the starting salary for a classroom teacher.
Higher earners: £50,000
With £37,430 taxable, total income tax is £8,982.05 and national insurance £2,994.40, leaving take-home pay of £38,023.55.
Despite a £31.75 tax cut compared with last year, a Scottish resident pays £1,496 more in income tax than someone elsewhere in the UK. Workers earning between £43,663 and £50,270 face an effective marginal tax rate of around 50% once national insurance is included. This salary range includes newly qualified ScotRail train drivers.
High earners: £110,000
Because income exceeds £100,000, the personal allowance is reduced to £7,570. Total income tax is £37,482.05, with national insurance of £4,210.60, leaving take-home pay of £68,307.35.
This is again £31.75 less tax than in 2025–26. However, someone earning the same amount elsewhere in the UK would pay £4,050 less in income tax. Due to the tapering of the personal allowance, the marginal tax rate on income between £100,000 and £125,140 reaches 67.5% (69.5% including national insurance). This band includes the starting salary for consultant doctors.
Highest earners: £200,000
With no personal allowance, the full income is taxable. Total income tax is £83,634.35, with national insurance of £6,010.60, resulting in take-home pay of £110,355.05.
Although this is £31.75 less tax than last year, a Scottish taxpayer pays £7,431 more than someone on the same salary elsewhere in the UK. Salaries at this level include some of Scotland’s most senior civil servants.
Overall, the 2026–27 Scottish income tax changes deliver modest gains for most taxpayers, with small reductions for low and middle earners helping to ease pressure from the cost of living. However, the continued freezing of higher-rate thresholds means fiscal drag remains a significant issue, pushing more people into higher tax bands as wages rise. While the reforms offer stability and protect lower incomes, the growing gap with the rest of the UK leaves higher earners in Scotland facing increasingly heavier tax burdens, reinforcing the long-term challenge of balancing fairness, competitiveness and revenue generation.