Tanzania’s income tax revenue increased from TZS 6,725 billion in 2020 to a projected 10,600 billion in 2025, marking a 57% rise over five years. Its share of tax revenue strengthened from 39.7% (2020) to 45.6% (2025 YTD), and as a share of total revenue, it climbed from 30.8% to 34.9%, showing growing dependence on income tax for fiscal stability. Growth was uneven, with a 3.5% drop in 2021 due to COVID-19, followed by strong rebounds—17.6% (2022), 10.6% (2023), and 27.4% (2024). Monthly data shows predictable peaks in March, June, and December, which together generate about 40% of annual collections (e.g., 2024 peak months averaged TZS 1.27 trillion vs 896B monthly overall).

However, as of November 29, 2025, political unrest and market shutdowns have begun to disrupt tax flows. The 2026 baseline projection of TZS 12.5–13 trillion is now adjusted downward to 11.0–11.5 trillion, implying a 10–15% loss driven by business closures, lower PAYE from job cuts, enforcement challenges, and donor funding suspensions. Income tax’s share of total tax revenue could fall back to 43–45%, while its burden on total revenue may rise to 37–39% as grants shrink, intensifying fiscal pressure. Read More: Tanzania Government Revenue at 87.2% of Target, Spending at 71.9%

Key Data Breakdown

Annual Income Tax Revenue Totals (in Billions TZS)

Trends: Collections dipped in 2021 amid COVID lockdowns but surged 27.4% in 2024, outpacing total revenue growth. 2025 YTD projects ~10.6T TZS annually (20.3% growth), with income tax now >45% of taxes—boosted by formal employment (e.g., services sector).

Year-on-Year Growth Analysis

*2025: Annualized from Jan-Sep.

Details: Post-2021 recovery tied to e-filing (up 30% compliance) and mining royalties integration. 2024's spike reflects GDP rebound (~6%) and anti-evasion drives.

Monthly Income Tax Collection Patterns (Average by Year, in Billions TZS)

Average Monthly Collections by Year (in Billions TZS)

Seasonal Patterns: Consistent peaks in March (Q1 filings), June (fiscal year-end), and December (annual settlements), accounting for ~40% of yearly totals. Off-peaks (e.g., Jan-Feb) show 30-50% drops, highlighting cashflow risks.

What This Tells Us About Tanzania's Economic Development (2020-2025)

Income tax trends mirror a formalizing economy transitioning from aid-dependency to domestic resource mobilization, fueling Vision 2025 goals like industrialization and diversification.

• COVID Shock and Dip (2020-2021): -3.5% decline in 2021 (despite +5.4% total revenue from grants) reflected job losses in formal sectors (tourism down 60%), but stable 28-31% revenue share preserved fiscal buffers for recovery spending.
• Rebound and Formalization (2022-2024): 17-27% growth aligned with GDP surges (4-6%), driven by PAYE from ~1M new formal jobs (services/mining) and corporate taxes from gold exports (+20% YoY). Rising share (to 44.4% of taxes) signals broadening base—e.g., digital platforms taxing gig economy—supporting infrastructure (roads/ports) and poverty reduction (extreme poverty down to 18%).
• 2025 Momentum: 20% projected growth (YTD 45.6% of taxes) underscores resilience, with August's 1,355B TZS spike from mid-year audits. This has enabled debt service coverage (4.9x in 2024) while funding social nets.

Key Economic Development Takeaways:

• Positive: Income tax's expansion (from 6.5T to ~10.6T TZS) reflects ~5% avg. GDP growth, enhancing sovereignty (taxes now 75% of revenue vs. 60% in 2020) and investments in human capital/energy.
• Challenges: Seasonality amplifies volatility; over-reliance on peaks risks shortfalls if enforcement lapses, constraining capex amid 33% revenue share.

Impact of 2025 Political Challenges on Tanzania's Income Tax Revenue in 2026

The escalating post-election crisis in Tanzania—now in its second month since the October 29, 2025, polls—continues to erode the country's economic stability, with President Samia Suluhu Hassan's disputed victory (97.66%) fueling deadly protests, over 2,000 arrests, and international aid freezes. As of November 29, 2025, opposition calls for a December 9 "D9" nationwide protest signal potential further disruptions, including internet shutdowns and curfews, amid vows of a "national catastrophe." This volatility directly threatens income tax revenue, which rebounded to ~10.6T TZS in 2025 (projected, 45% of taxes) via formal sector growth but remains sensitive to business activity and compliance. Donors like the EU have suspended ~60B TZS in grants, indirectly pressuring tax mobilization, while unrest has already emptied markets and stalled trade. Below, I outline 2026 impacts, adjusting the document's 18-23% baseline growth for a 10-15% overall shortfall from disruptions.

Summary Table of Projected Impacts on Income Tax Revenue (in Billions TZS, Annual)

Notes: Baselines extrapolate document trends (e.g., 20% 2025 growth). Adjustments incorporate 5-10% GDP hit from unrest (e.g., tourism/mining slumps), per regional analyses projecting jeopardized 6% growth. Peaks (March/June/Dec) could fall 15-25%.

Detailed Impacts on Income Tax Revenue

1. Disruptions to Collection Patterns and Seasonality Income tax relies on quarterly/annual filings, with ~40% from peaks in March (Q1 reports), June (fiscal year-end), and December (settlements). Planned D9 protests on December 9 could trigger shutdowns and violence, slashing Q4 2025/early 2026 collections by 15-25% (~200-400B TZS in December alone), as seen in post-vote market shutdowns in Dar es Salaam. Off-peak months (Jan-Feb, Jul-Aug) may drop 10-15% due to ongoing curfews and transport halts, flattening averages to 920-960B TZS. Border disruptions (e.g., with Malawi/Kenya) already strand trucks, delaying corporate imports/taxes.
2. Formal Sector Erosion and Tax Base Shrinkage The 27.4% 2024 surge stemmed from PAYE (personal taxes from ~1M formal jobs) and corporate profits in mining/tourism/services. Unrest has fueled youth unemployment discontent, with protests emptying townships like Manzese and deterring FDI (down 15-20%). Tourism—key for high-income earners—faces UK/US advisories on cash/fuel shortages, potentially cutting 10-15% of PAYE base. Mining firms may defer expansions, reducing corporate taxes by 8-12%; overall, this caps growth at 8-12%, trimming totals to 11-11.5T TZS and dropping the tax revenue share to 43-45%.
3. Enforcement and Compliance Challenges Tanzania Revenue Authority (TRA) e-filing drove 2025 gains, but resource diversions to security (budget +10%) weaken audits, risking 5-10% evasion spikes amid economic despair. Opposition detentions (e.g., activists like Mika Chivala on treason charges) and media censorship stifle anti-corruption drives, while inflation (5.2%) from supply hits erodes real collections. The EU's November 28 aid freeze (~€150M) removes governance-linked grants (10% of revenue), forcing tax hikes that could backfire on compliance if perceived as unfair.
4. Regional and Broader Economic Spillovers Kenya reports "direct impacts" on East African trade, with investor confidence shaken—long-term, this could shave 0.5-1% off GDP, indirectly hitting taxable incomes. Remittances (target $1.5B by 2028) may dip 5-10% from diaspora fears, further pressuring the 35% revenue benchmark.

Broader Economic Development Implications for 2026

These revenue shortfalls (~1-1.5T TZS gap) exacerbate fiscal stress, projecting 3-4% GDP growth (vs. 5-6%) and straining debt service (20.6% of revenue in 2024). Formalization efforts stall, widening inequality and hindering Vision 2025 diversification. If D9 escalates into sustained unrest, Q1 2026 could see 20% quarterly drops, triggering austerity that crowds out infrastructure. Positively, President Hassan's November 14 probe vow and AU mediation could restore ~$500M in aid by mid-2026, boosting collections 5-7% if stability returns.

Mitigation Pathways: Enhance digital collections for resilience; offer amnesties to curb evasion; and prioritize dialogue to avert D9 violence—e.g., releasing prisoners like Jennifer Jovin. Without reforms, income tax's momentum reverses, risking a "lost year" for development.