Kenyans Earning Above KSh 50,000 Face Possible Tax Increase Under New PAYE Plan

Some Kenyan workers could see their monthly tax deductions increase under proposed changes to Pay As You Earn (PAYE), even as the government plans to exempt more low-income earners from income tax.

The National Treasury, through Cabinet Secretary John Mbadi, has announced plans to introduce new tax rules that would set the PAYE rate at zero for workers earning up to KSh 32,333 per month.

The proposal is expected to be presented to Parliament next week for consideration, according to reports published on October 22, 2026.

Under the proposed changes, the government intends to remove the current personal relief of KSh 2,400 per month and replace it with a zero-tax band covering monthly earnings of up to KSh 32,333.

The move is intended to increase the number of workers who do not pay PAYE and reduce deductions for some employees earning modest salaries.

However, the changes could also leave some higher-income earners paying more tax because the existing personal relief would be scrapped.

According to figures reported by Business Daily, an employee earning KSh 60,000 per month could pay approximately KSh 473 more in income tax, while someone earning KSh 100,000 could pay an additional KSh 892.Workers earning KSh 200,000 monthly could face an increase of about KSh 3,867, based on the Treasury’s estimates cited in the report.

Meanwhile, employees earning between KSh 32,334 and KSh 50,000 could benefit from reduced PAYE deductions under the proposed arrangement.

The government estimates that the changes would exempt an additional 362,846 workers from paying PAYE, increasing the total number of formal-sector employees outside the income tax system to approximately 1.69 million.

The proposal comes as the government seeks to address concerns about the cost of living and the amount of money workers retain after statutory deductions.

However, the proposed changes have also raised questions about whether the tax relief for lower-income earners will offset the additional burden on some employees earning more.

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