🕊️ Financial PlanningHow income tax, PAYE and statutory deductions work in Kenya
Income from employment in Kenya is taxed through PAYE, deducted by your employer along with several statutory contributions. PAYE runs across five graduated bands, from 10% to 35%, and everyone gets a fixed personal relief of KSh 2,400 a month taken off the tax. On top of PAYE come NSSF, SHIF and the Affordable Housing Levy. This guide gives an overview; the bands, the relief and the NSSF earnings limits are set by law and change — check the current figures with the Kenya Revenue Authority (KRA). You will need a KRA PIN to be employed and to file.
The PAYE bands and the personal relief
PAYE is charged on your taxable pay — your gross pay minus your NSSF contribution, your SHIF contribution and the Affordable Housing Levy, which are all deducted before tax. The bands (monthly) are 10% on the first KSh 24,000, 25% on the next KSh 8,333, 30% from KSh 32,334 to KSh 500,000, 32.5% from KSh 500,001 to KSh 800,000, and 35% above KSh 800,000.
Every resident then gets a personal relief of KSh 2,400 a month (KSh 28,800 a year) subtracted from the tax due. In practice that means income up to about KSh 24,000 a month of taxable pay carries no PAYE once the relief is applied. Because the bands are graduated, a pay rise never leaves you worse off overall. For someone with one job, PAYE usually settles the tax; with multiple incomes or self-employment you file an annual return on iTax.
NSSF, SHIF and the Affordable Housing Levy
Three statutory deductions come off pay alongside PAYE. NSSF is 6% of pensionable pay from you and 6% from your employer, split into Tier I and Tier II by earnings limits that rise each year of the NSSF Act 2013 phase-in — it funds your future NSSF pension. SHIF (the Social Health Insurance Fund, which replaced NHIF) is 2.75% of gross pay, with a minimum of KSh 300 and no upper cap, and it funds your health cover. The Affordable Housing Levy is 1.5% of gross pay from you, matched by 1.5% from your employer.
NSSF and SHIF are deducted before PAYE is worked out, which lowers your taxable pay. The Affordable Housing Levy is also deducted before PAYE. The tax relief that briefly applied to the Housing Levy was repealed at the end of 2024, so the levy no longer reduces your tax — only your take-home pay. Self-employed people pay both the employee and employer shares of NSSF, and pay SHIF and the Housing Levy on declared income.
What you can claim and your marginal rate
Contributions to a registered pension or provident scheme — including the NSSF and a workplace or personal scheme — are deductible against your taxable pay, up to KSh 30,000 a month (KSh 360,000 a year) or 30% of pensionable pay, whichever is lower. This is one of the few ways an employee can legally reduce PAYE. A registered home-ownership savings plan and a mortgage-interest deduction (up to a cap) are also available.
Your 'marginal rate' — the tax and contributions on your next shilling of pay — is your PAYE band (often 30%) plus SHIF (2.75%) plus the Housing Levy (1.5%), and NSSF up to the Upper Earnings Limit. That combined figure is what matters when you weigh extra work, or decide how much to put into a pension scheme where the contribution comes out before tax.
Frequently Asked Questions
- How much can I earn before paying PAYE in Kenya?
- There is no tax-free band as such — PAYE starts at 10% from the first shilling of taxable pay — but the KSh 2,400 a month personal relief cancels the tax on roughly the first KSh 24,000 of taxable pay. NSSF, SHIF and the Housing Levy are deducted from the first shilling regardless.
- What are the PAYE rates?
- Five monthly bands: 10% on the first KSh 24,000, 25% on the next KSh 8,333, 30% from KSh 32,334 to KSh 500,000, 32.5% from KSh 500,001 to KSh 800,000, and 35% above KSh 800,000. A personal relief of KSh 2,400 a month is then deducted from the tax.
- Does the Affordable Housing Levy come back to me?
- No. Unlike a savings scheme, the 1.5% Affordable Housing Levy is a tax — it is not refunded and, since the end of 2024, no longer earns you a tax relief either. It funds the national Affordable Housing Programme, which you can separately apply to for a home through the Boma Yangu portal.
Informational content, not financial, tax or legal advice. Check amounts, limits and current rules directly with the official sources (the NSSF, the Central Bank of Kenya, the Kenya Revenue Authority, the Kenya Deposit Insurance Corporation) before making a decision.
