Income tax

Income tax on wages in Bosnia & Herzegovina is a flat tax — one percentage applied to the taxable base, with no progressive brackets. That is the one thing the two entities agree on. Everything else — the rate itself, the size of the personal allowance, and how much of it your family adds — is set separately by the Federation of BiH (FBiH) and Republika Srpska (RS). This page explains both, using the same rates the calculator runs on.

A flat rate — but a different one in each entity

In the Federation the income-tax rate is 10% (Zakon o porezu na dohodak FBiH, čl. 9). In Republika Srpska it is lower: 8% (Zakon o porezu na dohodak RS, čl. 4), reduced from a higher rate back in 2022 and unchanged for 2026. The gap sounds small, but it compounds with the very different personal allowances below, so the same gross salary can leave a noticeably different amount in your account depending on where you are registered. That is exactly why the calculator asks for the entity before it asks for anything else.

How the taxable base is built

Both entities compute tax on the same shape of base, even though the numbers differ:

Taxable base = gross salary − mandatory contributions − personal allowance

Contributions come off first. In FBiH the employee’s share is 31% of gross; in RS the full 31% is deducted from gross pay (the “gross-gross” model). Then the personal allowance (lični odbitak) is subtracted. Tax is charged only on what is left — and only if that figure is positive; a base of zero means no income tax at all. See the contributions page for how the deductions are split between employee and employer.

FBiH: a personal allowance built from coefficients

The Federation’s allowance starts from a basic amount of 300,00 KM per month and grows with your household. Each dependant is a fixed coefficient of that basic amount (Zakon o porezu na dohodak FBiH, čl. 24): a dependent spouse adds 0,5; the first child 0,5, the second 0,7, and the third and each further child 0,9; every other dependent family member adds 0,3, as does an established disability (your own or a dependant’s). The coefficients are summed on top of the basic amount and applied monthly through the tax card (porezna kartica). The calculator’s FBiH controls mirror this coefficient set exactly.

RS: a fixed allowance plus a 2026 relief

Republika Srpska uses a flat allowance instead of coefficients: a basic 1.000,00 KM per month, larger than the Federation’s, which is why the lower 8% rate bites on a smaller base. Each dependent family member adds a further 150,00 KM per month — a figure taken from an authoritative summary rather than a quoted statute clause, so check the cited source if it matters to you. For 2026 RS also introduced a low-earner relief of 50,00 KM per month that is exempt from income tax, for roles requiring no formal qualification or up to three-year vocational schooling; the calculator models it as an extra reduction of the taxable base, available only when you toggle the low-skill role.

A worked example

Take a single earner with no dependants on the same gross of 2.000,00 KM per month, and compare the two entities side by side. These are the engine’s own numbers:

Same gross, two different nets — and the difference is not only the headline rate but the much larger RS allowance working against the smaller RS base. The RS column reproduces the worked example published by the RS tax authority to the fening, which is how we know the formula is wired correctly.

Sources and status

Rates and allowances here are drawn from the primary gazettes — Službene novine Federacije BiH and Službeni glasnik Republike Srpske — via the tax authorities Porezna uprava FBiH and Poreska uprava RS. If a rule changed recently it may not be reflected here yet, and none of them has been through our final sign-off; the RS per-dependent addition in particular comes from a summary rather than the statute text. For a real tax or payroll amount, the gazette text or your entity tax authority is the binding one. For the entity-by-entity comparison in one place, see the entities page.

The content of this page is being extended over time.