What happened
The Indonesian Finance Ministry (Kemenkeu) has not yet decided whether to lift the PTKP, the yearly amount of income exempt from personal income tax (PPh). Deputy Finance Minister Juda Agung said so at the APBN KiTA state budget press briefing in Jakarta on 9 October 2026.
He explained that the review is thorough because the policy cuts both ways. It could boost household purchasing power, yet it would also shrink income tax receipts. The ministry is looking for the most balanced option.
Where the idea came from
A week earlier, on 2 October, Coordinating Minister for Economic Affairs Airlangga Hartarto set out the goal. People whose pay sits at the UMP, the provincial minimum wage, should no longer owe income tax, he said.
He used Jakarta as an example. A worker earning around Rp 5 million a month, close to the local minimum, is still taxed today. Over a year that pay exceeds Rp 60 million, while the exempt threshold stands at Rp 54 million.
Why the current threshold lags
In Airlangga's view, the PTKP has failed to keep pace with rising minimum wages. The gap is widest in regions with high minimum pay, such as the capital.
Anything earned in a year above the Rp 54 million threshold is subject to income tax. When minimum wages rise but the threshold stays put, even the lowest paid workers end up in the tax net.
How PTKP works
PTKP is not a perk for particular groups but a basic allowance for every taxpayer. The exempt amount is subtracted from annual income first, and income tax is calculated only on what remains.
The Rp 54 million figure is the base allowance for a single person. Under Indonesian rules the allowance rises for married taxpayers and for those with dependants, so any review matters for the whole scale, not just the headline number.
If the base threshold is raised, the change would touch almost every salaried worker. Even people earning well above the minimum would pay slightly less, because a larger slice of their income would be exempt.
The ministry's dilemma
For the budget the question is delicate. Personal income tax is a significant source of state revenue, and any increase in the threshold means some people stop paying while others pay less.
On the other hand, extra take home pay tends to be spent, which is exactly the effect the government hopes for when it talks about supporting purchasing power. So far the ministry has given neither a new figure nor a timeline.
What it means for Bali
In Bali the change would mainly affect employers. Under Indonesian rules the employer withholds income tax from staff salaries through the PPh 21 scheme and pays it to the state. That includes companies that manage villas and hire their teams.
If the threshold rises, some lower paid staff such as housekeepers, gardeners or security guards could drop out of the tax net. For the employer this changes the withholding calculation rather than cutting payroll costs. For the staff it means more take home pay.
Bali was not mentioned by Juda Agung or Airlangga Hartarto. No new threshold or timeline has been given, so it is too early to gauge the effect on individual employers.