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Level 1: Beginner · Growing and Planning

Tax basics

6 min read · Before you start: Lesson 3 · Updated 31 October 2026

Tax is the contribution collected to fund public services. For most employed people it is deducted before the salary arrives, which makes it easy to ignore until something changes — a second job, self-employment, a rental property, or a year when a refund may be due. This lesson covers the shape of the system and where the current figures are published.

The main taxes a household meets

• Income tax on what you earn, administered by the Board of Inland Revenue (BIR).
• National Insurance contributions, which are not strictly a tax but are deducted alongside it and fund the benefits in lesson 12.
• Health surcharge, a deduction from employment income.
• Value Added Tax (VAT), built into the price of many goods and services rather than billed separately.
• Property tax on land and buildings.
• Duties on imported goods, which lesson 44 touches on for vehicles.

Lessons 19 and 34 go through payslip deductions and household taxes in detail.

How income tax is calculated, in shape

The structure, rather than the numbers:

1. Start with total income for the year from all sources.
2. Subtract the personal allowance, a band of income on which no income tax is charged. Separate allowances exist for certain circumstances, including for pensioners.
3. Subtract any other allowable deductions that apply to your situation.
4. Apply the rate to what remains. Trinidad and Tobago applies a rate on chargeable income, with a higher rate above a threshold.

The allowance figures, thresholds and rates are set by legislation and change with the national budget. The BIR publishes the current figures, and this site does not reproduce them here precisely because they move: Budget 2027 announced several changes, some of which required a separate Finance Bill before taking effect. Lesson 34 tracks those with status labels.

PAYE and the annual return

Employees normally have income tax deducted through PAYE — Pay As You Earn — so the deduction happens before payment. That system estimates the year's liability as it goes, which means it can overshoot or undershoot where circumstances change mid-year. A return may therefore result in a refund or an additional amount owed.

When filing becomes necessary

Situations that commonly change a person's obligations:

• Self-employment or a side business. Income is not taxed at source, so it is declared and paid directly. Lesson 23 covers records and VAT thresholds for small businesses.
• More than one employer in a year. Allowances can be applied twice without coordination, producing an underpayment.
• Rental income, including from a property while living abroad, as lesson 47 notes.
• Claiming a deduction that is not applied automatically.
• A year with periods of unemployment, where PAYE may have deducted on the assumption of a full year.

Records

Keeping documents makes every tax question easier to answer: payslips, the annual statement from each employer, receipts for anything claimed, and records of other income. For self-employed people, separating business and personal money — a distinct account at minimum — turns a reconstruction exercise into a filing exercise.

The BIR has been moving services online, and Budget 2027 materials referred to mandatory electronic filing. Registration details and deadlines are published by the BIR.

Avoidance, evasion and getting it wrong

Claiming allowances you are entitled to is how the system is designed to work. Not declaring income is a different matter and carries penalties and interest. Where something has been filed incorrectly, the BIR has processes for correction, and addressing it directly is generally less costly than waiting for it to surface.

Someone meeting these deductions for the first time may find lesson 14 a more practical starting point.

Income earned outside a job is not taxed at source; lesson 24 covers what that changes.

Test yourself

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Not financial advice. This lesson is general education only. See our editorial policy and disclaimer.