The most consequential tax measure in the 2027 Finance Bill is a five-year progressive reform of the income tax (IR) that will reshape how millions of Moroccan households are taxed between 2027 and 2031. Presented by Finance Minister Fouzi Lekjaa on October 23, 2026, this reform extends the changes already introduced by the 2025 and 2026 finance laws and completes the fiscal reform launched under framework law No. 69-19.
The IR reform in five numbers
PLF 2027, presented October 23, 2026
The target: a three-bracket system by 2031
The reform's end-state, to be reached progressively by 2031, is radically simpler than the current six-bracket scale:
| Bracket (annual net taxable income) | Rate (2031 target) |
|---|---|
| 0 to 60,000 MAD | 0% (exempt) |
| 60,001 to 150,000 MAD | 10% |
| 150,001 to 500,000 MAD | 20% |
| Above 500,000 MAD | 30% |
Compare this to the current 2026 brackets: six brackets, marginal rates from 0% to 37%, and an exemption threshold of only 40,000 dirhams per year (about 3,333 dirhams per month).
What changes immediately in January 2027
The first step of the reform takes effect on January 1, 2027. Under the transitional provisions:
- Salaries below 10,000 dirhams per month (approximately 87% of all salaried workers in Morocco) would be fully exempt from income tax
- The exemption threshold rises from 40,000 to 60,000 dirhams per year in net taxable income
- The transitional bracket applies rates of 10% on the 60,001 to 80,000 dirham range, 20% on 80,001 to 100,000, 34% on 100,001 to 180,000 and 37% above 180,000 — the top rates remain unchanged in year one, then decline progressively
The Ministry estimates this first step alone will cost the treasury 5.5 billion dirhams in lost revenue in 2027, money the government describes as a direct transfer to household purchasing power.
The professional expense deduction: unified at 45%
A second major change concerns the forfait professionnel — the standard deduction that reduces taxable income before the brackets apply.
Currently, the system is fragmented:
- Employees earning up to 78,000 MAD/year gross deduct 35%
- Those above that threshold deduct 25%, capped at 35,000 MAD/year
- Certain categories (journalists, miners, pilots) deduct up to 45%
Under the PLF 2027, the deduction is unified at 45% for all employees, with the cap maintained at 35,000 dirhams per year. This is a significant increase for most workers — someone earning 80,000 dirhams gross would see their deductible amount rise from 20,000 to 35,000 dirhams, potentially dropping them into a lower bracket or below the exemption threshold entirely.
Note: the PLF also tightens the rules on exempt professional allowances. Only reimbursements for actual, justified expenses incurred in the employer's interest would remain tax-free. Permanent allowances that function as salary supplements would become taxable.
Worked example: gross salary 8,000 MAD/month
Here is how a worker earning 8,000 dirhams per month fares under the new rules (first step, January 2027):
Monthly gross salary MAD 8,000
Annual gross MAD 96,000
Professional expenses (45%) - MAD 43,200 → capped at MAD 35,000
CNSS + AMO (approximately) - MAD 6,480
Net taxable income MAD 54,520
Under 2026 rules: taxable at 10% and 20% brackets
→ annual IR: approximately MAD 1,452
Under 2027 rules: below 60,000 MAD threshold
→ annual IR: MAD 0 (fully exempt)
Monthly gain: approximately MAD 121
For higher earners, the gain is smaller but still positive. A worker earning 15,000 dirhams per month would see the 45% deduction push more income into lower brackets, reducing their annual IR by an estimated 1,500 to 2,000 dirhams.
The luxury vehicle "taxe de luxe"
Alongside the IR reform, the PLF 2027 raises the proportional stamp duty on first registration of luxury vehicles:
| Vehicle value (excl. VAT) | Current rate | New rate (2027) |
|---|---|---|
| 400,000 - 600,000 MAD | 5% | 6% |
| 600,001 - 800,000 MAD | 10% | 12% |
| 800,001 - 1,000,000 MAD | 15% | 18% |
| Above 1,000,000 MAD | 20% | 24% |
A vehicle imported at 1.2 million dirhams would face a stamp duty of 288,000 dirhams instead of 240,000 — an increase of 48,000 dirhams.
Why the reform matters
This is not just a tax cut. It is a structural reorientation of Morocco's fiscal policy with three explicit objectives:
-
Purchasing power: with inflation at just 0.7% in 2026, the real value of the tax cut goes entirely to households. The government frames the 5.5 billion dirhams cost as a direct social transfer
-
Formalization: by exempting 87% of salary earners, the reform removes a major disincentive to formal employment. Workers and employers in the informal sector now have a stronger reason to declare salaries
-
Equity: the top rate reduction from 37% to 30% is paired with the massive expansion of the exemption base. The government argues this makes the system more efficient without making it less progressive in effective terms
Timeline
| Date | Step |
|---|---|
| January 1, 2027 | First step: exemption threshold to 60,000 MAD, 45% unified deduction |
| 2028-2030 | Progressive bracket simplification |
| 2031 | Final bracket: 10% / 20% / 30%, full exemption below 60,000 MAD |
For the current 2026 brackets and a detailed calculation guide, see our Morocco income tax brackets 2026 article. To understand how IR fits with CNSS and AMO deductions, read our gross vs net salary guide.
Sources
This article summarizes the income tax provisions of the PLF 2027 presented on October 23, 2026. The full text is available at finances.gov.ma.
Salah-eddine covers personal income tax, salary calculations, and social security in Morocco. His goal is to make complex tax brackets and pay-slip deductions understandable for every Moroccan employee.
