Ruto And Mbadi Drop A Tax Bombshell That Could Change Every Payslip In Kenya

Treasury Cabinet Secretary John Mbadi has announced plans to scrap the Ksh28,800 yearly personal relief that workers enjoy. The government wants to change the Pay As You Earn bands instead.

Mbadi said the aim is to exempt workers earning Ksh32,333 and below from PAYE. He spoke on Thursday and said the Treasury will take the proposal to Parliament next week. It also includes removing stamp duty on land deals valued below Ksh1 million.

“We want to do away with this thing called relief,” the CS said.

At the moment every employee gets a personal relief of Ksh2,400 each month. This is the same as Ksh28,800 a year under Section 30 of the Income Tax Act. Employers deduct this amount from the tax calculated on a worker’s pay.

For example a worker whose monthly tax is Ksh5,000 gets Ksh2,400 knocked off. That leaves Ksh2,600 payable to the government. The relief matters most to low earners because it leaves more money in their pockets.

Employers now use progressive bands to work out PAYE. The first Ksh24,000 of monthly income is taxed at 10 per cent. The next Ksh8,333 is taxed at 25 per cent. Higher rates apply to income above that.

The plan to remove relief while keeping the same rates on other bands could hurt some workers. Thousands of employees may end up paying more once they lose the Ksh2,400.

The announcement came three days after President William Ruto raised the proposed exemption threshold from Ksh30,000 to Ksh32,333. He spoke during the 63rd Mashujaa Day celebrations in Uasin Gishu on Tuesday. The President said he had directed the Treasury to send the proposal to Parliament.

Ruto said every shilling saved means more money for food, transport and school expenses for workers on modest income.

https://x.com/kenyans/status/2113498608259760201?s=46

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