Payslip tax details explained
Income tax on a KAMI payslip is not this period's pay multiplied by a rate. It is an annual tax, estimated across the year and apportioned to the period — which is why the tax line moves when nothing about the employee's salary has changed.
Where: Payroll › the payroll run › Payslips › the employee's payslip You need: payroll rights to view payslips
The idea that explains almost every tax question
KAMI works out what the employee will owe for the whole year, then charges a share of it in each period:
gross income → less deductions → net income
→ estimated net annual income
→ annual income tax
→ ÷ taxable months → this period's taxTwo consequences follow, and between them they cover most of what people ask:
- A one-off payment raises tax for the rest of the year, not just the month it was paid, because it raises the estimated annual income the tax is computed from.
- Tax can change without pay changing. If the estimate of annual income changes — a bonus, a rate change, a mid-year join — the annual tax changes, and so does every remaining period's share.
How annual income is estimated
There is more than one way to estimate the year, and which one your company uses changes the shape of the tax across the year:
| Method | Estimates the year by |
|---|---|
| Annualized | Projecting from the taxable months |
| Forecasted | Forecasting the remainder of the year |
| Reconcile | Adding up actual net income from all payslips so far, plus this one |
| Reconcile (Gross Up) | The same, on a grossed-up basis |
Reconcile is the one that behaves differently in a way people notice. Because it works from what has actually been paid rather than a projection, it self-corrects: earlier over- or under-withholding is squeezed out as the year progresses, so the final periods of the year carry the correction. That is intended, not a fault.
What makes up the tax line
| Component | What it is |
|---|---|
| Period income tax | This period's share of the annual tax |
| Bonus tax | Tax attributable to bonus payments |
| Termination tax | Tax on separation pay, where applicable |
| Tax adjustment | A manual correction — see Manual tax adjustments |
These combine into tax payable.
💡 Tax payable is held as a negative figure, because it is money owed to the government rather than paid to the employee. If you are reading a report or an export and the tax looks negative, that is correct and not a sign inversion.
Deductions before tax
Not all pay is taxable and not all deductions reduce tax. What reduces taxable income includes statutory contributions that qualify as deductible, and anything you have placed in a non-taxable group — see Non-taxable groups.
This is why two employees on identical gross pay can carry different tax: the composition of that pay differs.
What Happens Next
- Tax is computed at calculation and stored on the payslip. Changing a tax setting later does not alter payslips already calculated.
- Because tax is annual, correcting one period's payslip changes the estimate that later periods are based on — the effect propagates forward, not backward.
- Year-end reporting reconciles what was withheld across the year against what was actually due; see Year-end payroll reports.
Tips
- Explain annualisation to employees once, in writing. Nearly every "my tax went up and my pay didn't" question is annualisation, and answering it generically saves the same conversation repeatedly.
- Expect a bonus to raise tax for the rest of the year. Tell people before the bonus run, not after.
- Do not correct annual tax with a manual adjustment unless you know why the engine is wrong. An adjustment silences the symptom and leaves the estimate wrong.
- Check the estimation method before your first year-end. Annualized and Reconcile produce noticeably different month-by-month withholding, and the difference is most visible in December.
- Watch mid-year joiners. Someone who joins in September has a very different annual estimate from someone who worked all year at the same salary; previous-employer figures matter.
Troubleshooting / FAQ
Q: An employee's tax rose but their salary did not change. Something changed the estimated annual income — a bonus, a one-off payment, or a correction to an earlier period.
Q: Tax is negative on the export. That is how tax payable is stored, because it is owed rather than paid out.
Q: Tax in December is much larger or smaller than other months. Likely a reconciling method squeezing out the year's over- or under-withholding. Check which estimation method is configured.
Q: Two employees on the same salary pay different tax. Compare the composition of their pay — non-taxable items and deductible contributions change taxable income, not just the headline figure.
Q: We corrected a payslip from three months ago. Did earlier tax change? No. The correction changes the estimate used from that point forward.