Key takeaways: Article 57 of Morocco’s General Tax Code (CGI) lists the allowances and benefits exempt from income tax (IR). In 2026, these exemptions cover severance pay (capped at MAD 1,000,000), family allowances, CNSS daily sickness/maternity benefits, internship stipends (capped at MAD 6,000/month) and various professional expense allowances. Understanding these exemptions is essential for optimising payroll while complying with tax law.
Legal Framework: Article 57 of the CGI
Article 57 of the General Tax Code provides an exhaustive list of allowances, allocations and benefits excluded from the salary income tax base. This list constitutes an exception to the general principle of taxation of all salary income under Article 56 of the CGI.
It is essential to distinguish allowances that are fully exempt from those that are only exempt up to caps set by law or regulation. Any amount exceeding these caps is added back to taxable income.
Complete List of Tax-Exempt Allowances in 2026
Family Allowances and Family Assistance
Family allowances paid by the CNSS are fully exempt from income tax. They amount to MAD 300/month per child for the first three children and MAD 36/month from the fourth child onwards. Family assistance benefits (disability support, death allowance) also benefit from this exemption.
Legal Severance Pay
Severance pay provided under Article 53 of the Labour Code is exempt from income tax up to a cap of MAD 1,000,000 (introduced by the 2023 Finance Act). This cap covers the legal severance calculated based on seniority:
- 96 hours of salary per year for the first 5 years
- 144 hours per year from the 6th to the 10th year
- 192 hours per year from the 11th to the 15th year
- 240 hours per year beyond 15 years
The portion exceeding MAD 1,000,000 is subject to income tax under ordinary rules.
Voluntary Departure Allowance
The voluntary departure allowance benefits from the same exemption conditions as severance pay, within the same cap of MAD 1,000,000, provided the departure is genuinely voluntary and cannot be reclassified as disguised dismissal.
Disability Pensions
Disability pensions paid by the CNSS or by a social welfare body are fully exempt from income tax, regardless of the disability category (1st, 2nd or 3rd category). This exemption also applies to disability pensions of occupational origin.
Life Annuities for Work Accidents
Life annuities and temporary allowances paid to victims of work accidents or occupational diseases, as well as to their beneficiaries, are fully exempt from income tax under Article 57-3° of the CGI. This exemption covers annuities paid directly by the employer or by an insurer.
CNSS Daily Sickness and Maternity Benefits
CNSS daily benefits for sickness, maternity and work accidents are exempt from income tax. For sickness, the benefit corresponds to 2/3 of the capped salary, paid from the 4th day of leave. For maternity, the benefit covers 14 weeks (100% of the capped salary).
CNSS Death Benefit
The death benefit paid by the CNSS to the beneficiaries of a deceased insured person is fully exempt from income tax. This benefit corresponds to a lump sum set by CNSS regulations.
Internship Stipends
Internship stipends are exempt from income tax up to MAD 6,000/month, for a maximum duration of 24 months. This exemption applies to internships governed by an internship contract compliant with current legislation. Beyond the MAD 6,000 cap, the excess is taxable.
Study Grants
Study grants awarded by the State or public bodies are exempt from income tax. This exemption does not extend to grants paid by private companies to their employees, which constitute taxable additional remuneration.
Representation Allowances
Representation allowances paid to employees are exempt from income tax provided they are duly justified by actual expenses. The exemption requires the employee to produce supporting documents in the event of an audit. Otherwise, the DGI may reclassify these allowances as taxable salary supplement.
Mileage Allowances
Mileage allowances reimbursed to employees using their personal vehicle for business travel are exempt from income tax within the official DGI scale. This scale is set according to the vehicle’s fiscal horsepower and the number of kilometres travelled. Any excess reimbursement is taxable.
Meal and Food Allowances
Meal allowances paid to employees working in conditions that prevent them from eating at home are exempt from income tax, provided they are not excessive and correspond to expenses actually incurred. The DGI assesses reasonableness on a case-by-case basis.
CIMR Supplementary Pension
Contributions to the CIMR supplementary pension are deductible from taxable income within the limits set by law (50% of net taxable salary, capped). However, pension benefits paid by the CIMR are taxable at the time of receipt, after applying a 60% allowance.
General Exemption Conditions
To qualify for exemption, each allowance must meet specific conditions:
- Legal compliance: the allowance must correspond to a case provided for in Article 57 of the CGI
- Cap compliance: amounts paid must not exceed the set limits
- Documentation: expense allowances must be supported by receipts
- Actual expenditure: reimbursements must correspond to expenses actually incurred
Reclassification Risks by the DGI
The General Tax Directorate (DGI) conducts regular audits and may reclassify any allowance that does not meet exemption conditions as taxable salary:
- Unjustified lump-sum allowances: systematic payments unrelated to actual expenses
- Cap exceedances: failure to add back the excess portion
- Salary concealment: use of exempt allowances to circumvent income tax
- Missing documentation: inability to produce receipts during an audit
Reassessments result in payment of the income tax due, plus penalties of 15% and late interest of 0.50% per month.
FAQ
Which allowances are exempt from income tax in Morocco in 2026?
The main exempt allowances are: CNSS family allowances, severance pay (capped at MAD 1,000,000), CNSS sickness/maternity daily benefits, death benefit, disability pensions, work accident annuities, internship stipends (capped at MAD 6,000/month), study grants, mileage allowances (DGI scale) and justified representation allowances.
Is severance pay always exempt from income tax?
Legal severance pay is exempt up to MAD 1,000,000 since the 2023 Finance Act. Beyond this cap, the excess is subject to income tax. Contractual or conventional severance exceeding the legal minimum follows the same regime.
Are transport allowances exempt from income tax?
Mileage allowances are exempt within the DGI scale limits. Lump-sum transport bonuses paid without justification constitute taxable salary supplement. It is advisable to retain all travel documentation.
What is the risk of non-compliance with exemption caps?
In the event of an audit, the DGI may reclassify allowances as taxable salary, with a tax reassessment plus 15% penalty and 0.50% late interest per month. The employer is jointly liable for withholding tax.
READ ALSO
- Salary Income Tax Scale 2026 in Morocco
- Tax Treatment of Severance Pay in Morocco
- CNSS Contributions 2026
- Payslip in Morocco
- Tax Law Advisory
Want to ensure your allowance policy complies with tax regulations? Our chartered accountants help you optimise your payroll and secure your practices. Contact Upsilon Consulting.
This article is written by the team of chartered accountants at Upsilon Consulting, a firm registered with the Order of Chartered Accountants (OEC) of Morocco.
