Mbadi Reveals How Much Workers Will Gain Under Proposed PAYE Changes

Speaking at the Banking Industry Total Tax Contribution 2026 event on Thursday, October 22, Mbadi said the government planned to tax income up to KSh32,353 at zero per cent, allowing workers earning within that range to keep more of their salaries.

“Recently, you heard us talk about some changes in the pay-as-you-earn bands to exempt up to 32,353. Those who are earning up to 32,353 shillings per month from tax, or rather taxing them at zero,” Mbadi said.

“In fact, we want to do away with this thing called relief. We tax you at zero up to 32,353. That attracts zero per cent tax.”

Mbadi said the change would return KSh2,083 to the payslip of a worker earning KSh32,353 a month.

“That is likely to give back someone who is earning 32,353 back to their payslip 2,083 shillings,” he said.

He said the amount might seem small to high-income earners but could make a difference for lower-paid workers.

“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,” Mbadi said.

He added that the government might not immediately change the other PAYE tax bands, although it could consider further adjustments later.

“We may not at this point change the other tax bands, but going forward that is a conversation that we will have,” he said.

Also Read: 600 CEOs List 6 Things They Want Ruto to Change

Mbadi acknowledged complaints from workers who say statutory deductions have reduced the take-home pay each month.

“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, and the salary people have been complaining, and I agree with them,” he said.

He cited the combined cost of contributions to the Social Health Authority (SHA) and the housing levy for a worker earning KSh50,000 a month.

“SHA and housing levy combined, for a KSh50,000 gross salary, is 2,125 shillings,” Mbadi said.

The two deductions total 4.25 per cent of a KSh50,000 gross salary, or KSh2,125.

Mbadi said the government wanted to pass some of the gains from improving economic conditions back to households.

“Now that the economy has shown signs of steadying, that’s why we are now coming up with these policies to make sure that we pass back some of the gains, the ground that we have gained,” he said.

Mbadi also said the National Treasury was preparing tax amendments for Parliament’s consideration. He mentioned a proposed stamp duty exemption for people buying land worth KSh1 million.

The proposed PAYE changes must go through the required legislative process before they take effect. Until the changes are approved and implemented, employers must continue applying the existing tax rules.

Also Read: Ruto Announces New PAYE Tax Exemption for Millions of Kenyans

Meanwhile, the Kenya Bankers Association (KBA) has called for a five-percentage-point reduction in PAYE across all income brackets, arguing that tax relief should benefit workers beyond those covered by the proposed zero-rate band.

KBA Chief Executive Officer Raimond Molenje said the proposal could help workers retain more of their earnings and rebuild public confidence in government.

“As we make Pay As You Earn adjustments, let’s consider how we can help Kenyans restore trust in their government. The proposed 5% tax cut for all workers is not merely about putting more money in people’s pockets,” Molenje said during the release of the 2025 Total Tax Contribution Report.

He added that the proposed reduction was also intended to encourage Kenyans to continue contributing to the economy.

KBA’s proposal differs from the government’s plan to tax income up to KSh32,353 at zero per cent. While the government’s proposal focuses on workers earning within that threshold, the association wants a tax reduction across all income brackets.

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Annah Nanjala Wekesa is a journalist at The Kenya Times, with a passion for crafting news-worthy stories that leave a lasting impact. She holds a Bachelor of Arts in Communication and Media from Kisii University. She has honed her skills in the art of storytelling and journalism. Her passion lies in the art of storytelling that resonates with audiences, driving a commitment to delivering news-worthy stories through the lens of integrity and precision. She can be reached at [email protected]

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