What is Education Tax in Jamaica?

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What is Education Tax?

It was the year 1983 and the “powers-at-be” decided to implement what we now call the Education Tax, in an effort to ensure that a pool of funds would be constantly available to assist with the advancement of education in Jamaica. Is this actually happening? Well, that’s up for debate. For further details regarding the corresponding legislation, check out the Education Tax Act.

Who Pays Education Tax in Jamaica?

• Employees (Employed persons over 18 years and under retirement age). Percentage paid: 2.25%.
• Self-Employed persons (who earn at least minimum wage). Percentage paid: 2.25%.
• Employers. Percentage paid: 3.5%.

Important points to note:

• For employees, their portion of this tax is paid by the employer.

• Domestic Workers are considered Employees; however, their Education Tax rate is different from that of other employees. Once a Domestic Worker makes more than minimum wage in any week, they are expected to pay 20 cents per week AND their employer should pay 20 cents per week. N.B. The employer is responsible for paying the worker’s portion of the tax.

• If a Domestic Worker has more than one employer and his/her combined wages is more than minimum wage, that Domestic Worker is considered as a Self-Employed person and must pay their own taxes by the stipulated deadline each month. Please note that this rule applies to all taxpayers (not just Domestic Workers) who have more than one employer…you are considered a Self-Employed person and you must file your taxes on time.

• Self-Employed persons, who make less than minimum wage in any week, are not liable to pay Education Tax.

• Employees, who make less than minimum wage in any week, are considered to be self-employed and therefore not liable to pay Education Tax.

Exemptions to Paying Education Tax

The following are not required to pay the employer’s portion of the Education Tax:

• Parish Councils
• The University of the West Indies
• Kingston & St. Andrew Corporation
• A Ministry/Department of Government

The following entities, located in Jamaica, are not required to pay Education Tax in respect of Jamaican citizens employed to them:

• High Commission
• International organizations that are entitled to diplomatic privileges under the Diplomatic Immunities & Privileges Act
• Foreign embassies
• Consulate/Agency of the United Nations

How is Education Tax Calculated?

Education Tax is calculated on what is called statutory income. This means they minus the NIS tax and the pension before calculating the Education Tax.

For example, John Brown is an employee to ABC Ltd. in Jamaica and makes $2,000,000 per year. To calculate the Education Tax that John is liable for (meaning the amount his employer must subtract from his salary each month):

1. Determine John’s monthly salary: $2,000,000 divided by 12 = $166,666.67.
2. Subtract the monthly NIS (3%, at April 2022) = $5,000; Thus, $166,666.67 – $5,000 = $161,666.67.
3. Subtract John’s pension (e.g., 5% of his basic salary) = $8,333.33; Thus, $161,666.67 – $8,333.33 = $153,333.34 (this is John’s statutory income).
4. Determine John’s Education Tax: find 2.25% of your statutory income. 2.25% * $153,333.34 = $3,450 (John’s education tax for the month).

OR you could just use our salary calculator to see what the Education Tax is for the month (hint: this is easier).

Education Tax in Jamaica

We hope the information in this article helped to answer your questions about Education Tax in Jamaica. If you still have queries, please leave a comment below and we’ll do our best to respond in a timely manner.

Take care…and know yu rights...nuh mek dem tek yu fi eeidiot!

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