The Kenya Bankers Association (KBA) is pushing for a five-percentage-point reduction in Pay As You Earn (PAYE) tax across all income brackets, differing from President William Ruto’s latest proposal to exempt workers earning Ksh32,333 or less per month from the tax.
KBA Chief Executive Officer Raimond Molenje, on Thursday, October 22, argued that tax relief should extend to all workers rather than focus on low-income earners, saying the changes could also help rebuild public confidence in government.
“As we make Pay As You Earn adjustments, let’s consider how we can help Kenyans restore trust in their government. The proposed 5% tax cut for all workers is not merely about putting more money in people’s pockets,” Molenje said during the release of the 2025 Total Tax Contribution Report.
He added that the proposed five-percentage-point cut was not merely about putting more money in workers’ pockets but also about rebuilding trust in government and encouraging Kenyans to continue contributing to the economy.
Kenya Bankers Association CEO Raimond Molenje speaking at a past meeting.
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Kenya Bankers Association
What It Means
For a worker earning Ksh50,000 monthly, a five-percentage-point reduction across the applicable tax bands could mean an additional Ksh2,244 in take-home pay each month, or Ksh26,955 annually, assuming the reduction applies to every shilling of income currently taxed and other tax reliefs remain unchanged.
KBA has previously estimated that its proposal would return about Ksh28 billion annually to workers, boosting consumer spending and demand for goods and services.
Additionally, the bankers also maintained that this could generate nearly Ksh42 billion in immediate economic output through increased consumption.
The government’s proposal has changed over the year, with the initial plan seeking to exempt workers earning Ksh30,000 or less from PAYE before Ruto raised the proposed threshold to Ksh32,333 during the Mashujaa Day celebrations in Eldoret.
Under the current tax system, resident employees receive personal relief of Ksh2,400 monthly, which offsets PAYE on the first Ksh24,000 of taxable income, while earnings above that level are taxed at progressively higher rates.
Treasury Cabinet Secretary John Mbadi has said the government intends to present an amendment to Parliament in November to formalise the exemption, with the proposed changes still requiring the legislative process before they can take effect.
KBA’s campaign for a wider review dates back to December 2025, when the banking industry proposed raising the minimum taxable income to Ksh30,000 and reducing the highest PAYE rate to 30 per cent, arguing that workers should retain more of their earnings to support households and businesses.
Mbadi Responder
Speaking at the same event, Mbadi cautioned that the government may not be able to implement a uniform PAYE reduction immediately but said the proposal could be considered in future tax reviews.
President William Ruto greeting Central Bank of Kenya Governor Kamau Thugge during the Central Bank of Kenya's 60th Anniversary in Nairobi on Thursday, September 17, 2026.
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CBK