Bankers Reveal How Much Workers Could Gain Monthly Under Proposed PAYE Reduction

The Kenya Bankers Association (KBA) has called on the government to reduce Pay As You Earn (PAYE) tax for all workers, proposing a five-percentage-point cut across income brackets as President William Ruto prepares to introduce tax relief for low-income earners.

The bankers’ proposal differs from Ruto’s plan to exempt employees earning Ksh32,333 or less per month from PAYE. The association argues that workers across different salary levels should benefit from lower taxes rather than limiting relief to those earning below a specified threshold.

Speaking on Thursday, October 22, during the release of the 2025 Total Tax Contribution Report, KBA Chief Executive Officer Raimond Molenje said a wider tax reduction could help workers retain more of their salaries while improving public confidence in the government.

Molenje noted that tax changes should be considered alongside efforts to rebuild trust between the government and taxpayers. He argued that allowing workers to keep more of their earnings could encourage economic activity and support continued tax compliance.

According to estimates previously presented by the association, its proposed changes could return approximately Ksh28 billion to workers annually. The bankers believe the additional disposable income would increase household spending and demand for goods and services, potentially generating nearly Ksh42 billion in immediate economic output.

Under the proposal, an employee earning Ksh50,000 per month could take home an additional Ksh2,244 monthly, equivalent to about Ksh26,955 annually, provided the suggested reduction applies across the relevant tax bands and other reliefs remain unchanged.

The government has been considering changes to PAYE throughout the year. The initial proposal targeted employees earning Ksh30,000 or less before Ruto announced during the Mashujaa Day celebrations in Eldoret that the exemption threshold would rise to Ksh32,333.

Treasury Cabinet Secretary John Mbadi has indicated that the government plans to present an amendment to Parliament in November to formalise the proposed exemption. However, the measure must pass through the legislative process before it can take effect.

Mbadi also cautioned that implementing a uniform PAYE reduction for all workers might not be possible immediately, although the proposal could be considered during future tax reviews.

Currently, resident employees receive personal relief of Ksh2,400 per month, which offsets part of their PAYE liability. Income above the applicable thresholds is taxed at progressively higher rates.

KBA has advocated broader tax reforms since December 2025, when it proposed increasing the minimum taxable income to Ksh30,000 and lowering the highest PAYE rate to 30 per cent.

The latest proposal places the focus on whether the government will extend tax relief beyond low-income earners as it prepares to take its planned exemption to Parliament.

https://www.kenyans.co.ke/news/128770-bankers-push-paye-cut-all-workers-ruto-targets-low-earners?fbclid=IwZXh0bgNhZW0CMTEAcGRvZgNzcnRjBmFwcF9pZA8yNzUyNTQ2OTI1OTgyNzkAAR6Ihwdec0gUth2FzKCMWoU2KHJZaJmjJPvWTQmAZOsR7tF9XG-kriMTdGnwfw_aem_urp-RgDvIvJx4sUIGmhQ2A

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