Scottish Income Tax Changes for 2025-26 / 2026-27

13th January 2026

Under the Scottish Government's latest budget, the structure of income tax for most people will include:

Robison cannot change the level at which people start paying tax, currently £12,571, as that is reserved to Westminster.

However, she is now raising the threshold of two of Scotland's other tax bands meaning people will pay the 19% starter rate on more of their money.

The basic (20%) rate, which currently starts at £15,398, will go up by 7.4% to £16,537.

The intermediate rate (21%), which currently starts at £27,492, will also go up by the same amount to £29,527.

The higher tax rate (42%) will continue to kick in at £43,663.

The advanced rate and top rate will also remain unchanged.

25/26 Rates
Starter rate £12,571 to £15,397 19%
Basic rate £15,398 to £27,491 20%
Intermediate rate £27,492 to £43,662 21%
Higher rate £43,663 to £75,000 42%
Advanced rate £75,001 to £125,140 45%
Top rate over £125,140 48%

These changes include the new 45% band and a 1 percentage point increase in the top rate to 48%, as announced in the budget.

The thresholds for higher bands are being frozen rather than being fully indexed to inflation, which means people's income can be pushed into higher rates over time (so-called "fiscal drag").

Who Saves Money?
Middle- and Lower-Income Earners

Threshold increases in the starter and basic bands reduce tax for many lower-middle earners compared with what they'd pay if bands had stayed the same.

The Scottish Fiscal Commission has previously noted that around half of Scottish taxpayers pay less income tax than they would under UK income tax rules — because the lower bands are relatively generous and have been uprated with inflation.

That means someone earning around £30,300 may pay slightly less tax under the Scottish system than if they lived elsewhere in the UK.

Who Pays More and By How Much?
High Earners (£75,000-£125,140)

The new 45% "advanced" rate band means these taxpayers pay more than before compared with the previous 42% top band.

In the earlier 2024-25 tax year, official impact assessments estimated that around 154,000 higher-earning Scots (top ~5%) would pay up to about £1,880 more as a result of introducing a similar 45p band.

This gives an indication of the scale — in practice the precise figure next year will depend on individual incomes.

Very High Earners (over £125,140)

Increasing the top rate from 47% (applied in older budgets) to 48% means the very highest earners pay more per pound on income above that amount.

Previous reporting suggested someone earning £100,000+ could be paying around £3,000 more in total tax than they would elsewhere in the UK because of the combination of a lower higher-rate threshold and new bands.

Effect of Frozen Thresholds

Analyses from fiscal researchers show that even without rate changes, freezing the thresholds means higher earners pay more over time than if bands kept pace with inflation. For example:

A person in the advanced bracket might pay around £136 more per year just because their threshold didn't go up with inflation.

Someone in the top bracket might pay around £199 more per year for the same reason.

So What Does This Mean in Practice?

A rough illustration:

Earning Level Estimated Tax Impact
£30,000 Likely pay slightly less tax than before / or than in rest of UK
£50,000 Could pay a bit more than under previous Scottish bands or UK rules (varies by personal circumstances)
£75,000-£125,140 Pay noticeably more due to 45% band (possibly hundreds to ~£1,000s more than under older system)
Over £125,140 Pay more due to top rate rising to 48% and frozen thresholds

Major Points to Understand

Not everyone pays more — many on lower and middle incomes benefit from uprated lower bands.

Higher earners do pay more — especially because of the new 45% band and the top rate increase.

Freezing upper thresholds adds extra tax over time even without explicit rate hikes.

The budget is projected to raise about £1.5 billion more than if Scottish income tax followed UK Government policy.

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.