Kenya’s Treasury will submit a bill to Parliament next week seeking to exempt monthly income of up to KSh32,333 from Pay As You Earn tax, Finance Minister John Mbadi said on Thursday, October 22.
The proposal would raise the number of formal-sector workers exempt from PAYE to 1.69 million from 1.32 million. An additional 362,846 employees would therefore fall outside the tax, according to Treasury estimates reported by Business Daily.
The plan would replace the KSh2,400 monthly personal relief with a zero-rated band covering income up to KSh32,333. The other proposed rates, ranging from 25% to 35%, would remain unchanged.
The redistribution of the tax benefit would affect salary levels differently. Employees earning between KSh32,334 and KSh50,000 would save up to KSh596 a month. A worker on KSh60,000 would instead pay KSh473 more, while the increase would reach KSh892 at KSh100,000 and KSh3,867 at KSh200,000.
Under the current system, the first KSh24,000 is taxed at 10% before a matching KSh2,400 personal relief is applied. The next band, from KSh24,001 to KSh32,333, is taxed at 25%.
The measure remains a proposal and has not taken effect. Parliament must approve the changes before implementation. Employers must continue calculating PAYE under the existing rules in the meantime, while other statutory payroll deductions remain separate.