Cost of Living in the UAE 2026: Prices, Tax and Housing
The cost of living in the UAE is shaped by three things that official sources set out clearly: there is no income tax on individuals, housing is the largest part of Dubai's consumer basket, and several charges are added on top of rent and bills. This guide uses the Central Bank of the UAE's September 2026 economic review for inflation, the UAE Government portal for tax, housing, health insurance and school rules, and the Dubai Electricity and Water Authority for utility tariffs. Every figure was read on 14 October 2026. Amounts are in UAE dirhams.
Quick answer
The UAE does not levy income tax on individuals, and charges 5 per cent VAT on goods and services. Consumer prices in Dubai were 5.3% higher in the second quarter of 2026 than a year earlier, and housing, water, electricity and gas, which make up 37.6% of the basket, rose 7.3%. The Central Bank forecasts UAE inflation at 2.4% for 2026. In Dubai, tenants pay a housing fee of 5 per cent of yearly rent, and electricity starts at AED 0.230 per kWh before a fuel surcharge.
Prices in 2026
The Central Bank of the UAE's Quarterly Economic Review for September 2026 reports Dubai's Consumer Price Index, using data from the Data Dubai Platform. The report's cut-off date is 11 August 2026.
| Category | Weight in the basket | Q1 2026 | Q2 2026 |
|---|---|---|---|
| All items | 100.0 | 3.3% | 5.3% |
| Housing, water, electricity, and gas | 37.6 | 7.4% | 7.3% |
| Transportation | 11.7 | 0.2% | 15.1% |
| Food and beverages | 9.6 | 2.7% | 7.3% |
| Education | 8.0 | 2.6% | 2.3% |
The percentages are changes on a year earlier. The Central Bank's reading:
- Housing is the main driver. The housing, water, electricity and gas category accounts for 37.6% of the basket, and its inflation stood at 7.3% in Q2 2026.
- Transport jumped. Transportation recorded inflation of 15.1% in Q2 2026, compared with 0.2% in Q1, which the bank attributes to factors including increased fuel costs.
- Food picked up. Food and beverages rose by 7.3% in Q2 2026, compared with 2.7% in Q1.
- The national outlook is lower. The Central Bank forecasts UAE inflation at 2.4% in 2026 and 1.9% in 2027, and expects it to remain below global averages.
The Dubai figures are for one emirate, and the forecast is for the whole country, so the two are not the same measure.
Tax
| Tax | What the UAE Government portal says |
|---|---|
| Income tax | The UAE does not levy income tax on individuals |
| Value added tax | 5 per cent on the purchase of goods and services, ultimately borne by the end consumer |
| Excise tax | Levied on specific goods that are harmful to health |
| Hotels and restaurants | May charge one or more of: 10 per cent tax on the room rate, 10 per cent service charge, 10 per cent municipality fees, a city tax ranging from 6 to 10 per cent, and a 6 per cent tourism fee |
In Dubai, hotels charge a Tourism Dirham Fee per room per night, ranging from AED 7 to 20 depending on the category of the hotel. That matters if you stay in a hotel or hotel apartment while you look for a home.
Housing costs beyond the rent
The UAE Government portal says rent rates depend on the location and size of the property. Its leasing page gives no rent figures, and nor do we. It does set out the charges that come with a lease:
- Broker commission: some brokers may require a commission fee of up to 5 per cent of the total amount of rent.
- How rent is paid: in one payment or several, as agreed, with post-dated cheques covering the agreed lease period.
- Dubai housing fee: tenants pay housing fees to Dubai Municipality at the rate of 5 per cent of the yearly rental charges, added to the monthly electricity and water bills.
- Abu Dhabi municipality fee: once the lease is registered in the Tawtheeq system, a municipality fee is levied at 5 per cent of the rental value or the rental index, whichever is higher, and added to the monthly water and electricity bill across 12 months.
- Registration: lease agreements must be registered with the authority in each emirate, and registration is compulsory to connect utility services.
To sign a lease you need a copy of your passport, a valid residence visa and your Emirates ID.
Electricity and water in Dubai
The Dubai Electricity and Water Authority (DEWA) uses a slab tariff, so the price rises with consumption. A fuel surcharge is added, and 5% VAT applies to the tariffs.
| Residential electricity, per month | Tariff per kWh |
|---|---|
| 0 - 2000 kWh | AED 0.230 |
| 2001 - 4000 kWh | AED 0.280 |
| 4001 - 6000 kWh | AED 0.320 |
| 6001 kWh and above | AED 0.380 |
| Residential water, per month | Tariff per cubic metre |
|---|---|
| 0 - 27 m³ | AED 7.700 |
| 27 - 54 m³ | AED 8.800 |
| 54 m³ and above | AED 10.120 |
The fuel surcharge for October 2026 is AED 0.060 per kWh for electricity and AED 1.100 per cubic metre for water. DEWA says the surcharge varies with the price of fuel supplied to its generation plants.
Other emirates have their own suppliers: Taqa Distribution in Abu Dhabi, the Sharjah Electricity, Water and Gas Authority in Sharjah, and Etihad Water and Electricity in Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah. We did not read their tariffs.
Health insurance
- Abu Dhabi: employers and sponsors are responsible for providing health insurance for their employees and their families, covering 1 spouse and 3 children under 18 years.
- Dubai: employers are required to provide health insurance for their employees, and sponsors are required to get cover for their resident dependents.
- Private sector employees and domestic workers: from 1 January 2025, employers must purchase a health insurance policy before a residency permit is issued or renewed. The basic insurance package costs AED 320 per year.
Under the basic package, the insured pays a 20 per cent co-payment for inpatient care, up to AED 500 per visit with an annual cap of AED 1,000, and a 25 per cent co-payment for outpatient care, up to AED 100 per visit.
School costs
- Government schools: education is free for UAE citizens. Expatriate students may attend on payment of 6,000 AED as tuition fees, subject to conditions: the parent should hold a job in a government, semi-government or local entity, and the language of instruction is Arabic for all subjects.
- Private schools: fees are regulated by the educational councils and zones in each emirate, and differ by school type, curriculum, facilities and ranking.
- Dubai fee increases: for-profit schools can raise fees based on their inspection grade and the Education Cost Index, which was set at 2.35% for the 2025-26 academic year.
Income rules that affect your budget
- Sponsoring your family: you need a minimum salary of AED 4,000, or AED 3,000 plus accommodation.
- Green residency for skilled employees: a minimum monthly salary of AED 15,000.
- Visa costs: a family residence permit is AED 200 on GDRFA Dubai's service card. See our UAE visa fees guide.
How to build your own budget
- Get a real rent quote for the area you want, since the portal's leasing page gives no rent figures.
- Add 5 per cent for the Dubai housing fee or the Abu Dhabi municipality fee, and allow for a broker commission of up to 5 per cent.
- Estimate utilities from the DEWA slabs, the fuel surcharge and 5% VAT if you live in Dubai.
- Check who pays for health insurance. Your employer covers you, and in Dubai you insure your dependents.
- Price schooling directly with the school.
- Remember what is missing: there is no income tax to deduct from your salary.
What this page does not cover
We have not included rent levels, grocery prices, salaries or a national Consumer Price Index figure for 2026. The websites of the Federal Competitiveness and Statistics Centre and the Dubai statistics portal refused our requests on the day of checking, so the inflation figures here are the ones the Central Bank published.
Frequently asked questions
Is there income tax in the UAE?
No. The UAE Government portal states that the UAE does not levy income tax on individuals. It levies 5 per cent value added tax on the purchase of goods and services.
What is the inflation rate in Dubai?
Dubai's Consumer Price Index inflation reached 5.3% year on year in the second quarter of 2026, up from 3.3% in the first quarter, according to the Central Bank of the UAE's September 2026 review.
What is the inflation forecast for the UAE?
The Central Bank of the UAE forecasts inflation at 2.4% in 2026 and 1.9% in 2027.
What is the housing fee in Dubai?
Tenants pay housing fees to Dubai Municipality at 5 per cent of the yearly rental charges. The fee is added to the monthly electricity and water bills.
How much is electricity in Dubai?
DEWA's residential slab tariff is AED 0.230 per kWh for the first 2000 kWh a month, rising to AED 0.380 per kWh above 6000 kWh. A fuel surcharge of AED 0.060 per kWh applied in October 2026, and 5% VAT is added.
Do I have to pay for health insurance in the UAE?
Employers are required to provide health insurance for employees in Abu Dhabi and Dubai. In Dubai, sponsors must arrange cover for their resident dependents. The basic package for private sector employees costs AED 320 per year.
Can expat children attend government schools in the UAE?
Yes, on payment of 6,000 AED as tuition fees and subject to conditions, including that the parent works for a government, semi-government or local entity.
Official sources
- Central Bank of the UAE — Quarterly Economic Review, September 2026 (PDF)
- UAE Government portal — Taxation
- UAE Government portal — Other taxes
- UAE Government portal — Leasing a property in the UAE
- Dubai Electricity and Water Authority — Slab tariff
- UAE Government portal — Public utilities
- UAE Government portal — Getting a health insurance
- UAE Government portal — School fees
- UAE Government portal — Admission to the UAE government schools
- UAE Government portal — Residence visa for families of employees
All figures verified against the official sources above on 14 October 2026. Inflation figures are from a report with a cut-off date of 11 August 2026. Utility tariffs are for Dubai. Information, not financial advice.