NAIROBI — President William Ruto’s government is preparing a sweeping PAYE (income tax) adjustment that would exempt workers earning KSh30,000 and below per month from income tax and cut the tax rate to 25% for those earning up to KSh50,000, widening relief beyond the current tax-free threshold of KSh24,000.
Under the plan, Ruto said about 1.5 million workers would pay zero PAYE, while another 500,000 would see their tax rate reduced by five percentage points, a move officials say is aimed at boosting disposable income and easing cost-of-living pressure.
The proposal also includes relief at the top end: the maximum PAYE rate would be capped at 30%, down from current bands that rise above 30% for higher earners.
Treasury plans to table the changes in a Tax Laws (Amendment) Bill, ahead of the broader Finance Bill 2026 expected later this year, with the government signalling it wants the PAYE measures considered as soon as Parliament resumes.
The Kenya Bankers Association has recently argued for a higher minimum taxable income, saying purchasing power has weakened and that leaving workers with more take-home pay can support spending, savings, investment and loan repayment—potentially strengthening revenue over time.
