Gov’t Scraps PAYE for Kenyans Earning Below Ksh30,000
President William Ruto has said that Kenyans earning up to Ksh50,000 will benefit from tax savings.
Ruto has directed that the appropriate rate be decreased from 30% to 25% under the proposed tax adjustments by his administration.
During a meeting with UDA aspirants at State House in Nairobi on Wednesday, the President stated that the proposals will be sent to Parliament for discussion and approval.
The measures would run alongside a separate amendment in which the government intends to exempt Kenyans earning less than Ksh30,000 from paying income tax completely.
According to the Head of State, the reforms are based on favorable fiscal performance and budgetary decisions made since his administration entered office in 2022.
“We are saying any Kenyan who earns upto Ksh50,000, we are reducing their taxes from 30 to 25 per cent. 1.5 million working Kenyans will not pay taxes,” Ruto said.
“We have begun the process of bringing down taxation. We will be taking a proposal that any Kenyan paying Ksh30,000 coming down will not be paying taxes again.”
Under the existing tax scheme, an individual earning Ksh50,000 falls partially into the 30% tax bracket.
However, in actuality, their payslip includes various necessary deductions before and after tax, such as NSSF pension contributions, the 2.75 percent SHA levy, and the 1.5 percent Housing Levy.
Using current statutory rates, a Ksh50,000 earner would initially lose about Ksh3,000 to NSSF, Ksh1,375 to SHA, and Ksh750 to the Housing Levy, for a total of approximately Ksh5,125 in mandatory deductions before PAYE is applied.
This leaves a taxable compensation of around Ksh44,875.
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Under the current progressive tax bands and after personal relief, such a worker pays roughly Ksh5,800 in PAYE.
This pushes their total deductions to just over Ksh11,400 a month and leaving them with a take-home pay of about Ksh38,600.
If the proposed changes lower the top PAYE rate from 30 per cent to 25 per cent without altering the other statutory deductions, the actual gain for a Ksh50,000 earner would depend on how Parliament restructures the tax bands and reliefs.
Speaking in Kiambu National Polytechnic on Budget & Privatisation, National Treasury CS, John Mbadi has termed Kes 30,000/month as "survival salary" that government has "no business taxing".
— Julians Amboko (@AmbokoJH) February 2, 2026
I hope this means Finance Bill 2026 includes a proposal to revise the tax free income… https://t.co/AzrLogmjNa pic.twitter.com/Zh1vf9khZA
Meanwhile, Ruto said the decisions will ensure that taxation is applied in a more equitable manner, easing the burden on low-income earners and shielding them from excessive economic strain.
Gov’t Scraps PAYE for Kenyans Earning Below Ksh30,000
