Kenyans Could Earn More as Bankers Push for 5% PAYE Tax Cut for All Workers

Kenyans could take home more money every month if a proposal by the Kenya Bankers Association (KBA) to reduce Pay As You Earn (PAYE) tax by five percentage points across all income brackets is adopted.

The proposal differs from President William Ruto’s latest plan to exempt workers earning Ksh32,333 or less per month from PAYE, with the banking industry arguing that tax relief should benefit employees across the income spectrum.

Speaking on Thursday, October 22, during the release of the 2025 Total Tax Contribution Report, KBA Chief Executive Officer Raimond Molenje said the proposed tax reduction could help ease the financial burden on workers while rebuilding 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.

He explained that reducing the tax burden could provide workers with additional disposable income while encouraging greater participation in the formal economy.

According to the association, a broader tax reduction could also stimulate economic activity by allowing households to spend more on essential goods and services.

Under the proposal, a worker earning Ksh50,000 per month could receive an estimated additional Ksh2,244 in take-home pay monthly, translating to approximately Ksh26,955 annually.

However, the actual savings would depend on how the proposed reduction is structured, the applicable tax bands and other existing tax reliefs.

The association has previously estimated that its proposal could return approximately Ksh28 billion annually to workers, potentially boosting household purchasing power and supporting businesses through increased consumer spending.

The proposal comes amid ongoing discussions about taxation, the cost of living and the amount of money employees retain after statutory deductions.

While the President’s proposal focuses on exempting lower-income earners, KBA is advocating for a broader approach that would extend tax relief to workers across different salary levels.

The proposal has yet to be adopted, meaning workers should not expect an immediate change in their payslips.

Further government announcements will determine whether the proposed tax adjustments are incorporated into future tax policy.

SOURCE:https://www.instagram.com/p/Dey5sLxFBdj/?utm_source=ig_web_copy_link&vrfl=MzRlODBiNWFlZA==&srtk=MzRlODBiNWFlZA==

KajiadoWestVoice feedback-opera-news-app@opera.com