1.7 Million Kenyans Set for Tax Relief as New Plan Signals a Surprise for Top Earners-Details

1.7 Million Workers to Get Tax-Free Salaries as Top Earners Pay More

About 1.7 million Kenyan workers are expected to benefit from proposed changes to income tax, which would exempt more low-income earners from paying Pay As You Earn (PAYE) tax while increasing the tax burden on higher earners.

Treasury Cabinet Secretary John Mbadi said the government plans to raise the monthly tax-free income threshold from Sh24,000 to Sh32,333. Under the proposal, workers earning up to Sh32,333 per month would not pay PAYE tax. The changes would also remove the current personal tax relief of Sh2,400, which is available to all eligible workers.

According to Treasury estimates, the number of formal sector workers exempt from income tax would rise from 1.32 million to approximately 1.69 million. Meanwhile, the number of salaried employees required to pay PAYE would fall from 2.14 million to 1.77 million.

Workers earning between Sh32,334 and Sh50,000 per month would also benefit from reduced taxes, with their monthly tax bills falling by up to Sh596. However, those earning more than Sh50,000 would pay additional taxes under the proposed changes.

For example, a worker earning Sh60,000 per month would pay an extra Sh473 in tax. Those earning Sh100,000 and Sh200,000 would pay an additional Sh892 and Sh3,867, respectively.

The proposal comes as many Kenyan households continue to face pressure from rising living costs, higher taxes and other statutory deductions. The Kenya Bankers Association estimates that workers’ purchasing power has declined by up to 12 per cent over the past five years.

Official employment data shows that only about 12 per cent of formal sector workers earn more than Sh100,000 per month, highlighting the country’s income inequality.

The National Treasury plans to present the proposals to Parliament for consideration and approval. The changes will take effect only after the necessary legal processes are completed.

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