Kenyans earning over KSh 50k salaries to pay more tax in govt's new zero PAYE plan

• Treasury CS John Mbadi confirmed the government plans to raise the zero-PAYE threshold to KSh 32,333, scrapping the KSh 2,400 monthly personal relief for all workers
• Workers earning KSh 32,333 or below would pay no income tax at all, removing a further 362,846 people from the PAYE bracket
• The bill to implement the changes is expected in Parliament next week, but employers must apply existing rules until it passes

Elijah Ntongai is an experienced editor at TUKO.co.ke, with more than four years in financial, business, labour and technology research and reporting. His work provides valuable insights into Kenyan, African, and global trends.

Kenyans earning more than KSh 50,000 a month face higher income tax deductions under Treasury proposals designed to fund an expanded zero-PAYE band for lower earners, with a bill to enshrine the changes expected before Parliament next week.

Treasury Cabinet Secretary John Mbadi confirmed the details on Thursday, October 23, 2026, saying the KSh 2,400 monthly personal relief currently available to all workers would be abolished as the tax-free band is widened to cover income up to KSh 32,333.

What the proposed tax changes entail

President William Ruto unveiled the policy direction during Mashujaa Day celebrations in Eldoret on October 20.

Under the plan, the first KSh 32,333 of monthly earnings would attract zero PAYE, replacing the existing structure in which the first KSh 24,000 is taxed at 10% before the KSh 2,400 relief effectively cancels that liability.

The existing higher rates of 25%, 30%, 32.5% and 35% would remain unchanged, meaning the relief is concentrated at the lower end of the income scale.

According to a report by NTV, workers earning between KSh 32,334 and KSh 50,000 would see a modest reduction in their tax bill of up to KSh 596 per month, while those on exactly KSh 32,333 could gain around KSh 2,083 on their payslip.

Above KSh 50,000, the elimination of personal relief pushes deductions upward: an employee on KSh 60,000 would pay KSh 473 more per month, one on KSh 100,000 would owe an additional KSh 892, and a worker on KSh 200,000 would pay KSh 3,867 more each month.

Mbadi acknowledged the different impact across income groups.

"For someone who is earning a lot of money it may sound ridiculous, but for someone who is earning that 32,000, it is something," he said.

How many formal workers are affected

Kenya has approximately 3,468,997 people in formal employment. Of those, 1,328,625 are already exempt from PAYE under the current threshold.

The proposed changes would lift a further 362,846 workers out of the tax bracket entirely, raising the exempt share from roughly 38% to nearly 49% of the formal sector workforce.

National Assembly Finance and Planning Committee chair Kuria Kimani confirmed that the implementing bill is due before Parliament next week.

Workers and employers should continue applying existing PAYE rules until the legislation is approved and gazetted.

Mbadi framed the changes as a response to genuine public frustration.

"There has been concern and complaints, and genuine ones, that some of the decisions that the government took recently, or in the past, reduced the power of our pay slips," he said.

Earlier, the Kenya Bankers Association separately called for a five-percentage-point reduction across all PAYE bands, a broader approach that Treasury has not adopted.

Source: TUKO.co.ke