Ruto Increases Tax-Free Pension Savings In The Disputed Finance Bill 2024
Kenya Kwanza has given pensioners a major relief by agreeing to increase the amount of taxable pension savings by 50% from Sh20,000.
This means that retirement savings of up to Sh30,000 will be tax-free if the National Assembly approves the change.
The 50% increase is outlined in the Finance Bill, 2024, which was reviewed by the Kenya Kwanza PG on Tuesday.
The meeting at State House agreed on a slew of other tax reforms to help Kenyans cope with the high cost of living while also securing their future.
Kuria told the country after the State House meeting that the incentive was a significant boost to Kenyans looking to save more for their pensions.
“To support our pension contributions, because we will one day all of us retire, we are increasing the amount allowable for tax exemptions from sh20,000 per month to Sh30,000 per month,’‘ said Molo MP Kimani Kuria.
Employees contribute to registered pension schemes and provident funds.
The change aims to encourage people to save more for retirement while receiving tax breaks.
However, it is critical to understand the conditions for tax exemption.
Employees’ tax-exempt contributions are limited to the lesser of the total contributions or 30% of their pensionable income, which is Sh360,000 per year.
Contributions that exceed these limits will be subject to income tax.
Furthermore, if an employee and employer’s combined contributions exceed Sh30,000 in a month, the entire employer’s contribution is non-deductible for the employer’s income tax liability.
Ruto Increases Tax-Free Pension Savings In The Disputed Finance Bill 2024
