Ethiopia Salary Calculator 2025 – Net Salary, Gross Salary, Income Tax & Pension

What Is Gross Salary?

Gross salary is the total amount of money an employee earns before any deductions. It includes the basic salary plus any bonuses, allowances, or other earnings. This is the full amount offered in a job contract and forms the base for calculating deductions.

What Is Net Salary?

Net salary, also called take-home pay, is the actual amount an employee receives in their account after all deductions. These deductions usually include income tax and pension contributions. Net salary reflects what you can spend each month.

What Is Income Tax (in Ethiopia)?

Income tax is the amount of money deducted from your salary and paid to the government. In Ethiopia, this is based on a progressive tax system—meaning the more you earn, the higher percentage you pay. It is calculated monthly based on government-issued tax brackets.

What Is Pension Contribution?

A pension contribution is a mandatory deduction made to support your retirement savings. In Ethiopia, the employee contributes 7% of their gross salary, and the employer adds 11% more on top of that. This system helps secure future income after retirement and applies to both public and private sector workers.

From the Employee's Perspective

• Starts with a gross salary
• Deducts income tax based on government brackets
• Deducts 7% pension contribution
• What's left is the net salary (take-home pay)

From the Employer's Perspective

• Pays the agreed gross salary to the employee
• Withholds employee's tax and pension and pays to the government
• Contributes 11% pension on top of the gross salary
• Total cost to the employer = gross salary + 11% pension

Example Calculation

If an employee's gross salary is 10,000 ETB:
- Income tax: based on the tax table (varies)
- Pension (employee): 700 ETB (7%)
- Pension (employer): 1,100 ETB (11%)
- Net salary: Gross – tax – 700