Winners and Losers: Why Ruto’s Low-Income Tax Relief Could Cost Kenyans Earning Over Ksh50,000

President William Ruto’s recent directive to raise the Pay As You Earn (PAYE) tax-exempt threshold to Ksh32,333 per month has sparked sharp concern among middle-income salaried workers, as the National Treasury prepares companion measures that could increase tax deductions for individuals earning Ksh50,000 and above.

Announced during the Mashujaa Day celebrations in Eldoret, the administration’s flagship proposal aims to cushion low-wage workers against severe living costs by completely zero-rating their monthly income tax. However, the fiscal mechanics required to offset the resulting state revenue shortfall threaten to shift a heavier financial burden directly onto middle-class households.

To fund the expanded tax-free bracket, the Ministry of Finance, led by Treasury Cabinet Secretary John Mbadi, plans to eliminate the statutory Ksh2,400 monthly personal tax relief currently enjoyed by all resident taxpayers.

While workers earning below Ksh32,333 will benefit from net gains, higher-earning employees will no longer have the flat tax relief to cushion their gross earnings from upper-tier tax brackets.

Financial modeling shows that for employees earning Ksh50,000 or more, the loss of personal relief outweighs the benefit of the widened base bracket, culminating in a net increase in monthly PAYE withholdings.

The upcoming legislative proposal, slated for submission to Parliament, has reignited intense debate over equitable taxation and the shrinking disposable income of Kenya’s formal labor force.

Civil society representatives and trade union leaders argue that targeting the formal middle class—who already absorb statutory deductions for health coverage, housing levies, and social security—compounds financial distress without addressing broader tax enforcement across informal sectors.

As MPs prepare to scrutinize the tax bill, salaried Kenyans face growing uncertainty over whether political promises of low-income relief will ultimately be underwritten by their own paychecks.

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https://peopledaily.digital/insights/pain-for-kenyans-earning-ksh50000-and-above-as-ruto-seeks-tax-exemption-for-low-income-earners

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