Thousands of Kenyans Set to Enjoy PAYE Tax Relief as Mbadi Raises Tax-Free Salary Limit

Thousands of Salaried Kenyans Set for PAYE Tax Relief as Mbadi Raises Exemption Limit

Thousands of salaried Kenyans could soon receive relief from income tax after Treasury Cabinet Secretary John Mbadi announced plans to increase the tax-free income limit under the Pay As You Earn (PAYE) system.

On Monday, October 19, Mbadi said the government intends to exempt workers earning KSh 32,800 or less per month from PAYE. This is an increase from the earlier proposal of KSh 30,000.

According to reports by TUKO and The Star, the Treasury plans to introduce a Tax Laws Amendment Bill in Parliament in November 2026. The proposal aims to reduce the financial pressure on low-income earners and help them retain more of their monthly salaries.

PAYE is the income tax deducted from employees’ salaries by their employers and submitted to the Kenya Revenue Authority (KRA).

Under the proposed changes, workers earning KSh 32,800 or less would take home their full taxable salary without PAYE deductions. However, other deductions, such as pension contributions and other applicable statutory payments, may still apply.

The proposal comes at a time when many Kenyan households are struggling with the cost of food, transport, rent, school fees and other basic needs.

Mbadi said the government wanted Kenyans who had endured difficult economic conditions to benefit from the country’s economic recovery.

Earlier in 2026, the Treasury had proposed raising the tax-free threshold from KSh 24,000 to KSh 30,000. The latest announcement raises the proposed limit further to KSh 32,800.

However, the changes are not yet law. Parliament must consider and approve the proposed amendments before the new tax-free limit can take effect.

The government has not confirmed the exact date when the changes would begin. Workers will therefore continue to be taxed under the existing rules until any new law comes into force.

If approved, the proposal could provide welcome relief to low-income workers by allowing them to keep more of their earnings and meet their daily expenses.

Source:https://www.facebook.com/100067867727102/posts/1490061733266070/?mibextid=rS40aB7S9Ucbxw6v

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