Scottish income tax basic and intermediate thresholds to rise by 7.4% from April 2026

The Scottish government published its draft Budget for 2026-27 on 14 January 2026, setting out plans to raise income tax thresholds for lower earners, roll out new childcare support and make changes to council tax, business rates and air travel taxes¹. The basic and intermediate rate thresholds will increase by 7.4% in 2026-27¹. The Scottish government says that, as a result, around 55% of taxpayers are expected to pay less income tax than they would elsewhere in the UK, where thresholds remain frozen¹.

The starter, basic and intermediate rate thresholds change from 6 April 2026, while the higher, advanced and top rate thresholds are unchanged². Thresholds for the higher, advanced and top rates will remain frozen until at least 2028-29¹. Income tax thresholds in the rest of the UK will remain frozen until 2031¹.

Source: Scottish Budget 2026-27, Scottish Government, 14/01/2026². The personal allowance figures assume individuals receive the standard personal allowance, and those earning more than £100,000 see their personal allowance reduced by £1 for every £2 earned over £100,000².

Two new council tax bands will be introduced from April 2028 for the most expensive homes in Scotland¹. Properties valued between £1m and £2m will fall into a new Band I, while homes worth more than £2m will be placed in Band J; fewer than 1% of households are expected to be affected¹. The Scottish child payment will increase to £28.20 a week per child from April 2026, in line with inflation, up from £27.16, and from 2027 the rate will rise to £40 for families with children under the age of one¹. Air Departure Tax will be introduced from April 2027, replacing UK Air Passenger Duty for flights departing Scotland, with rates initially matching those charged elsewhere in the UK and a new private jet supplement added from 2028-29¹. Commercial passengers will not see any immediate change to flight taxes under the plans¹.

Why it matters for households

Scottish taxpayers earning within the starter, basic and intermediate bands will have more of their income taxed at 19%, 20% and 21% from 6 April 2026, because the points at which those bands end move up¹. The intermediate rate now runs to £43,662, the same upper limit as in 2025-26, so the 21% band absorbs income that would previously have fallen into it at a lower starting point². Anyone whose income sits above £43,662 sees no change to the thresholds applying to the higher, advanced and top rates, which stay frozen until at least 2028-29¹. Because the personal allowance is unchanged at £12,570, and tapers for those earning over £100,000, the effect differs by income level². The Scottish government's estimate that around 55% of taxpayers will pay less income tax than they would elsewhere in the UK rests on UK thresholds remaining frozen until 2031¹. Council tax changes for the most expensive homes do not take effect until April 2028¹.

What happens next

The Scottish Parliament will now debate the draft Budget, and MSPs will vote on whether to approve the plans¹. If approved, most measures will come into force from April 2026, with some tax changes phased in later¹. As the Scottish National Party does not have a majority at Holyrood, support from other parties will be needed for the Budget to pass, though the Scottish Labour Party has said it will not block it¹.