- Treasury CS John Mbadi announced an upward revision of the zero PAYE threshold during an economy forum in Eldoret on October 19, 2026
- The new figure marks an increase from the KSh 30,000 threshold the government had previously proposed earlier in 2026
- The revised proposal is part of a standalone Tax Laws Amendment Bill the government plans to table in Parliament in November 2026
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Treasury Cabinet Secretary John Mbadi stated that the government will raise the zero Pay As You Earn (PAYE) tax threshold to KSh 32,800 per month, an upward revision from the KSh 30,000 figure that had been proposed earlier in 2026.
Source: Twitter
The disclosure was made during the Mashujaa Day 2026 Economy Thematic Week held in Eldoret on Monday, October 19, 2026.
"Because the economy has shown signs of improving, those Kenyans who are earning KSh 32,800 and below, why don't we tell them to take all their salary and go?" Mbadi said. "That is an improvement from the KSh 30,000 we talked about."
What Changed in the PAYE Proposal
The original government plan, floated earlier in 2026, had proposed exempting the first KSh 30,000 of monthly income from PAYE, with the subsequent KSh 20,000 subject to a 25% rate.
That proposal was initially scheduled for tabling in Parliament in February 2026 but was postponed to allow for further consultation and alignment with the Finance Bill, which was later shelved entirely.
The government subsequently promised to revive the measures through a standalone Tax Laws Amendment Bill, and Mbadi's Eldoret address suggests that process is back on course, with November 2026 now the target for tabling.
The CS did not clarify whether the band covering earnings between KSh 32,801 and KSh 50,000, which under the earlier plan would have attracted a 25% rate, will also be adjusted in the revised bill.
The Treasury has not yet released the full text of the proposed legislation.
Who Stands to Benefit
Under the proposed changes, any salaried Kenyan earning KSh 32,800 or less each month would keep their entire gross salary with no PAYE deduction.
The measure is expected to offer relief to workers in sectors such as retail, security, and domestic employment, where monthly wages frequently fall below the new threshold.
If Parliament passes the bill as described, the revised zero-PAYE threshold could come into force as early as January 2027, though the government has not confirmed an effective date.
The impact on workers earning above the threshold will depend on whether the higher income bands are also restructured in the final bill, a detail Mbadi did not address in his remarks.
The Treasury has framed the proposal as part of a wider effort to reduce the cost of living and boost consumer spending at a time when inflation continues to strain household budgets across Kenya.
Source: TUKO.co.ke