More Pay or More Pain? Why Middle-Income Earners Are Still Worried About the New PAYE Proposal

Kenyan workers are facing a major financial turning point today. Government leaders are introducing significant tax changes that affect monthly salaries. This shift brings new debates across the country.According to a report by Citizen Digital, President William Ruto proposed exempting workers earning up to Ksh.32,333 a month from Pay As You Earn tax. This announcement came during the Mashujaa Day celebrations on October 20, 2026. Many low-income earners initially welcomed this proposed tax relief.However, the new policy comes with a major catch for employees. The proposal will completely abolish the monthly personal relief of Ksh.2,400. This existing relief currently helps eligible resident employees lower their monthly tax bills.

National Treasury officials confirmed that this removal applies to all workers. Employees earning above the tax-free band will lose their personal relief completely. They will still face standard tax rates on income above the zero-rated threshold.Financial experts noted that middle-income earners might actually lose more money overall. While the expanded tax band helps some, losing the relief hurts many families. Household budgets remain tight as living costs continue to rise across the nation.Additional statutory deductions will still apply to every monthly salary. Payments for the Affordable Housing Fund and social health programs remain mandatory. These separate deductions mean net take-home pay might not increase significantly.A special legislative Bill will reach Parliament next week for review. National Treasury Cabinet Secretary John Mbadi and parliamentary leaders are backing the push. Employers must continue using current tax rules until lawmakers officially approve the changes.

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