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Join on Telegram Rabat – Morocco’s income tax reform (IR), a central feature of the 2025 Finance Bill (PLF), introduces a range of measures designed to ease the tax burden on taxpayers, with a focus on middle and lower-income groups, in a bid to boost purchasing power and promote formal employment.
This reform, which promises major relief for civil servants, employees, and retirees, is rooted in the recommendations of the May 2019 National Taxation Conference and aligns with the historic social dialogue agreement of April 2024.
It underlines the executive’s commitment to boosting incomes and promoting fiscal fairness, with tax cuts of up to 50% for certain income brackets. In practical terms, the reform will see civil servants receive increases of up to MAD 480 ($48) while extending income tax exemptions to over 80% of private sector employees and nearly 96% of retirees.
Ibrahim Rais El Fenni, an accountant and auditor, explained that the income tax reform aims to gradually reduce the tax burden on taxpayers while broadening the tax base.
“This approach seeks to support household purchasing power while ensuring state revenues are maintained through a more evenly distributed tax base,” El Fenni said in an interview with MAP. He noted that these adjustments would ease the tax burden on households with modest and middle incomes.
For example, a salaried employee with a taxable monthly income of MAD 5,000 ($500) will see their tax reduced from MAD 333.33 ($33) to MAD 166.67 ($16), saving MAD 166.66 ($16). For taxpayers earning between MAD 8,333 and MAD 15,000 ($ 833 to $1,500) per month, the tax reduction could reach up to MAD 400 ($40).
Key provisions in the 2025 income tax reform
The 2025 PLF introduces ambitious reforms to the income tax system aimed at reducing the fiscal burden.
One of the key changes, according to El Fenni, is the increase in the exemption threshold from MAD 30,000 to MAD 40,000 annually, ensuring full exemption for those earning less than MAD 6,000 ($600) per month. This measure is designed to shield low-income households from income tax.
The reform also plans to raise the family allowance, increasing the deduction for dependents from MAD 360 ($36) to MAD 500 ($50) per person, with the overall cap rising from MAD 2,160 ($216) to MAD 3,000 ($300) for up to six dependents. Additionally, the income tax brackets will be revised to ease the burden on middle-income earners.
The new tax rates will be as follows:
- 0% for incomes up to MAD 40,000 ($4,000)
- 10% for incomes between MAD 40,001 and 60,000 ($4,000-$6,000)
- 20% for incomes in MAD 60,001 to 80,000 ($6,000-$8,000) range
- 30% for incomes in MAD 80,001 to MAD 100,000 ($8,000-$10,000) range
- 34% for incomes between MAD 100,001 and MAD 180,000 ($10,000-$18,000)
- 37% for incomes above MAD 180,000 ($18,000), effectively reducing the previous marginal rate of 38%
Business implications of the income tax reform
The income tax reform is expected to drastically boost purchasing power, particularly for those earning between MAD 5,000 and MAD 15,000 per month.
This increase in purchasing power is likely to drive higher demand for local goods and services, contributing to economic growth. El Fenni observed that by easing the tax burden on employees, the reform could also foster a more harmonious social climate within businesses, reducing turnover costs and mitigating potential employee dissatisfaction.
However, the long-term effectiveness of the reform will depend on broader economic conditions, particularly inflation, which could erode the benefits of these changes over time. El Fenni recommended periodic adjustments to the tax brackets to account for economic fluctuations and ensure the reform’s lasting impact.
Overall, the reform aims to alleviate the tax burden on a large portion of taxpayers, strengthening purchasing power and promoting fiscal fairness. In turn, it holds significant potential to invigorate the national economy, stimulate domestic consumption, and enhance social cohesion.
