2027 Finance Bill proposes income tax cuts, higher pensions and expanded social aid

Morocco plans to cut income taxes for employees, raise minimum pensions, increase direct social assistance and expand public spending on health care and education under its 2027 Finance Bill, Economy and Finance Minister Fouzi Lekjaa announced Friday during a presentation before Parliament.

The proposed measures include exempting employees earning less than MAD 10,000 ($1,000) a month from income tax starting Jan. 1, 2027, raising the minimum monthly pension to MAD 1,700 and doubling the pension rate granted to widows.

The government also plans to increase minimum monthly direct social assistance from MAD 500 to MAD 600, cover electricity bills of MAD 100 or less for around six million customers and allocate MAD 6 billion to programs targeting youth employment, training and business support.

Income tax cuts to benefit employees earning less than MAD 10,000

The government plans to reform the personal income tax system to improve household purchasing power and encourage declared employment.

The reform will raise the annual net income threshold exempt from income tax from MAD 40,000 to MAD 60,000, reduce the number of taxable brackets from five to three and introduce progressive rates of 10%, 20% and 30%.

The highest income tax rate will fall from 37% to 30%.

Starting Jan. 1, 2027, employees earning less than MAD 10,000 a month will be exempt from income tax, bringing the proportion of employees exempt from the tax to 87%, according to Lekjaa.

Most affected employees are expected to gain around MAD 500 a month, while the measure is projected to cost MAD 5.5 billion in 2027.

The government expects the benefits to increase gradually in subsequent years. By 2031, monthly gains are projected to reach MAD 1,186 for employees earning MAD 11,800 a month and MAD 3,079 for those earning MAD 18,700 a month.

Minimum pension to rise to MAD 1,700

The government plans to increase the minimum monthly pension from around MAD 1,000 to MAD 1,700 starting Jan. 1, 2027, as part of a gradual increase toward MAD 3,000 by the end of its term.

The measure is expected to benefit approximately 500,000 retirees, including more than 150,000 widows.

The government will also double the pension rate granted to widows from 50% to 100%, effective Jan. 1, 2027. The measure is expected to benefit 431,000 widows.

Lekjaa said the two pension measures would cost a combined MAD 10 billion, adding that they were not motivated by narrow political considerations.

Direct social assistance to increase to MAD 600

The minimum monthly direct social assistance payment will rise from MAD 500 to MAD 600 starting Jan. 1, 2027, with the government planning further gradual increases toward MAD 1,000.

The increase is expected to cost MAD 3 billion.

Lekjaa said assistance would remain a right for eligible families regardless of whether one or more household members were employed.

The government also plans to gradually replace the current socioeconomic eligibility index with a system based on households’ actual income. The proposed change aims to prevent families from losing assistance because of exceptional purchases, such as a phone or bicycle, that may affect their eligibility score.

MAD 45.4 billion allocated to health care

The health care budget is set to increase by MAD 3 billion from 2026 to MAD 45.4 billion in 2027, with 8,000 new positions planned.

Funding will support the rollout of territorial health groups, construction of the new university hospital in Casablanca, and completion and equipping of hospitals in Beni Mellal, Guelmim and Errachidia.

The government also plans to upgrade 1,600 health facilities, continue work at more than 90 provincial and regional hospitals, and accelerate the digitalization of the health system.

Education budget rises to MAD 121.3 billion

The government plans to increase funding for education, higher education and vocational training by MAD 5.3 billion to MAD 121.3 billion, with 17,874 new positions.

Priorities include expanding preschool education, improving students’ basic skills, reducing school dropout rates, developing alternative education pathways for students who leave school and improving graduates’ employability.

The government also allocated MAD 10.4 billion in investment funding for housing in 2027.

It plans to continue direct housing assistance, which had reached nearly 128,000 beneficiaries by the end of September 2026, while accelerating efforts to address inadequate housing.

Additional measures include an integrated rural housing program and simplified planning and building procedures in rural areas.

State to cover electricity bills of MAD 100 or less

Starting Jan. 1, 2027, the government will cover monthly electricity bills of MAD 100 or less for approximately six million customers, representing 60% of electricity consumers.

The measure is expected to cost MAD 2.8 billion and benefit households and craft businesses, particularly in rural areas.

MAD 1 billion earmarked to curb prices of basic goods

The government has allocated MAD 1 billion to measures intended to bring the prices of basic goods to more affordable levels.

The plans include establishing six regional agricultural aggregation and marketing companies, reforming meat and fish distribution channels, modernizing wholesale markets, strengthening competition and reducing intermediary costs.

The measures are intended to improve the distribution of agricultural products and other essential goods while addressing factors contributing to high consumer prices.

MAD 6 billion for youth training, employment and businesses

The 2027 Finance Bill allocates approximately MAD 6 billion to a national program targeting young people through training, employment and business support.

The program aims to train 100,000 young people annually according to businesses’ needs and provide another 100,000 with their first professional experience each year.

The government also plans to gradually expand training capacity to between 150,000 and 200,000 beneficiaries annually.

Under the business support component, 12,000 companies are expected to receive assistance each year through improved access to financing, guarantees and markets, including public procurement opportunities.

Additional measures include introducing a professional mobility pass to help young people take jobs outside their home areas and launching an affordable rental housing program for young workers.

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