Mbadi Reveals How Much Kenyans Could Gain From Proposed PAYE Tax Changes

Treasury Cabinet Secretary John Mbadi has revealed that workers earning KSh32,353 per month could receive an additional KSh2,083 in take-home pay if the government implements proposed changes to Pay As You Earn (PAYE) taxation.

Speaking during the Banking Industry Total Tax Contribution 2026 event on Thursday, October 22, Mbadi said the government was considering taxing monthly income of up to KSh32,353 at zero per cent. The proposal aims to ease the tax burden on lower-income earners and allow them to retain more of their salaries.

Mbadi explained that the government intended to remove the existing relief arrangement and introduce a zero per cent tax rate on income within the proposed threshold. He said a worker earning KSh32,353 monthly could gain KSh2,083 under the planned changes.

The Treasury CS acknowledged that the amount might appear small to high-income earners but argued that it could make a meaningful difference to workers who earn modest salaries. He added that the government might not immediately adjust the other PAYE tax bands, although further changes could be considered in the future.

Mbadi also addressed concerns over statutory deductions that have reduced employees’ take-home pay. He cited the combined deductions for the Social Health Authority (SHA) and the housing levy, which amount to KSh2,125 for an employee earning a gross monthly salary of KSh50,000. The deductions represent 4.25 per cent of that salary.

According to Mbadi, the government wants households to benefit from improvements in economic conditions by introducing policies that allow workers to retain more of their earnings. He said the National Treasury was also preparing tax amendments for consideration by Parliament, including a proposed stamp duty exemption for people purchasing land valued at KSh1 million.

Meanwhile, the Kenya Bankers Association (KBA) has called for a five-percentage-point reduction in PAYE across all income brackets. Chief Executive Officer Raimond Molenje said the proposal would extend tax relief to workers beyond those covered by the government’s proposed zero-rate threshold.

The government’s proposed PAYE changes are not yet in effect and must undergo the required legislative process before implementation. Until the proposals are approved and brought into force, employers will continue applying the existing tax rules when calculating employees’ PAYE deductions.

Source: https://www.facebook.com/100046664565790/posts/1843277767237691/?app=fbl

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