Indonesia PTKP tax threshold review since 2016

PTKP, or the non-taxable income threshold, is currently set at 4.5 million rupiah a month for single workers without dependents. Telisa Aulia Falianty, a professor at the University of Indonesia, said the level should be reviewed in line with inflation, noting that many countries adjust such thresholds regularly and that Indonesia has not done so since 2016.

Labor groups have already pushed for a sharper increase to 7.5 million rupiah a month nationwide. Supporters say a higher threshold would leave more cash in the hands of lower- and middle-income workers, especially those near the minimum wage, and could provide some relief to households facing higher costs for food, transport and other essentials.

The trade-off is fiscal. Directorate General of Taxes chief Bimo Wijayanto said revenue would “change a little” if the policy is approved and that the tax office would need to look for a new base of taxpayers or revenue sources. That matters for investors because any broad tax relief can widen budget pressure unless offset by stronger collections elsewhere.

The debate also comes as consumer spending sentiment remains elevated in Adalytica’s gauges, suggesting households still have room to consume, but not necessarily without policy support. For markets, the key question is whether Jakarta opts for a targeted income-tax relief measure that supports demand without undermining the government’s revenue plan.

The final decision now rests with the economic coordinating ministry. If the change is approved, the market will watch for how aggressively the threshold is raised and which parts of the tax base are expanded to compensate.