The Inland Revenue Department (IRD) is advising all taxpayers that, following the recent legislative amendments to the Income Tax Act enacted on February 19, 2026, tax codes must be reviewed and adjusted where necessary.

A tax code determines the amount of income tax deducted from an individual’s earnings throughout the year under the Pay-As-You-Earn (PAYE) system. It is essential that each taxpayer’s tax code accurately reflects their current allowances and entitlements.

If your tax code is incorrect, you may:

• Pay more tax than required, thereby reducing your net income; or

• Pay less tax than required, which may result in an outstanding balance at the end of the income year.

The recent amendments introduced several significant changes, including:

• A $40,000 cap on specified allowances and deductions;

• Increases to Child and Education Allowances;

• Expansion of allowable Medical Expense deductions;

• An increase in credit union shares; and

• The introduction of a new Investment Allowance.

These changes will affect the tax codes of many taxpayers. As a result:

• Individuals impacted by any of these amendments are encouraged to update their tax codes

promptly to ensure accurate tax deductions.

• Taxpayers whose total allowances exceed the new $40,000 cap must ensure their tax codes are adjusted to reflect the revised limit.

Updating your tax code ensures that the correct amount of tax is deducted at source, supports effective financial planning, and minimizes the likelihood of year-end tax adjustments.