Understanding PAYE in Kenya
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PAYE (Pay As You Earn) is the system where your employer withholds income tax from your salary each month and remits it to the Kenya Revenue Authority. Tax is charged on your taxable income, which is your gross pay less allowable deductions such as pension, SHIF and the Affordable Housing Levy. A personal relief of KES 2,400 per month (KES 28,800 per year) is then set against the tax due.
The PAYE rates run on five bands from 10% up to a top rate of 35%. As of 2026 the bands below apply (Kenya Revenue Authority, Finance Act 2023). Rates can change, so confirm the current bands on the KRA iTax portal before relying on them.
| Monthly taxable income (KES) | Annual (KES) | Rate |
|---|---|---|
| 0 - 24,000 | 0 - 288,000 | 10% |
| 24,001 - 32,333 | 288,001 - 388,000 | 25% |
| 32,334 - 500,000 | 388,001 - 6,000,000 | 30% |
| 500,001 - 800,000 | 6,000,001 - 9,600,000 | 32.5% |
| Above 800,000 | Above 9,600,000 | 35% |
The point of this article is that you cannot change the rates, but you can legally reduce the taxable income they apply to. The levers below do exactly that.
Logging into the iTax Portal
Access the iTax portal to check your PAYE records and file returns. Visit the KRA website, select iTax login, and use your KRA PIN and password. New users register with national ID or passport details for quick setup.
- Go to the KRA iTax page.
- Enter your KRA PIN and password.
- Complete two-factor authentication if prompted.
- Navigate to the returns or PAYE services tab.
Forgot your password? Use the recovery option with your email or phone. Keep login details secure to stay compliant with your tax filing obligations.
Annual Tax Filing Deadline
The individual income tax return is due by 30 June each year. File even if all your tax was deducted through PAYE, because the return is where you reconcile reliefs and claim any refund due. Late filing attracts penalties from KRA.
Prepare documents like your P9A from your employer, payslips, deduction receipts, and bank statements. Use iTax to submit the individual return, reconciling monthly PAYE with your actual income and reliefs.
1. Maximise Pension Contributions
Contributions to a registered pension scheme are deductible from your taxable income, up to KES 30,000 per month (KES 360,000 per year). This cap was raised from the previous KES 20,000 per month by the Tax Laws (Amendment) Act 2024. Directing more of your salary into a registered scheme lowers the income your PAYE is charged on.
The deduction covers contributions to NSSF and to registered occupational or individual pension schemes, subject to the overall monthly cap. Because the deduction comes off your taxable income, the value of the saving depends on your marginal tax band.
For example, an employee in the 30% band who contributes KES 20,000 a month to a registered scheme reduces monthly taxable income by KES 20,000, which lowers PAYE by about KES 6,000 a month at that marginal rate. Check your current contributions and how they appear on your payslip, and confirm your scheme is registered with the Retirement Benefits Authority.
NSSF Contributions
NSSF contributions are mandatory and deductible. The fund is contributed at 6% from the employee and 6% from the employer, applied between a lower and an upper earnings limit that are being phased upward under the NSSF Act 2013. The figures are dated, so use the schedule below and confirm the current limits with NSSF.
| NSSF (per side, per month) | Feb 2025 - Jan 2026 | Feb 2026 onward |
|---|---|---|
| Lower earnings limit | KES 8,000 | KES 9,000 |
| Upper earnings limit | KES 72,000 | KES 108,000 |
| Maximum per side | KES 4,320 | KES 6,480 |
NSSF is capped at the upper earnings limit, so no contribution is charged on pay above it. Confirm your employer is remitting correctly through iTax and request your NSSF statement to verify.
2. Claim SHIF and the Housing Levy as Deductions
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SHIF replaced NHIF on 1 October 2024. It is charged at 2.75% of gross monthly salary, with a minimum of KES 300 and no upper cap, under the Social Health Insurance Act. Since the Tax Laws (Amendment) Act 2024, SHIF is a deduction from taxable income, so it reduces the income your PAYE is charged on rather than being claimed as an insurance relief.
The Affordable Housing Levy is charged at 1.5% from the employee and 1.5% from the employer on gross pay, under the Affordable Housing Act 2024. The employee portion is also a deduction from taxable income. Both SHIF and the housing levy are deducted automatically through payroll, so check your payslip shows them and that your taxable income is computed after they are taken out.
How SHIF Appears on Your Payslip
Your SHIF amount is simply 2.75% of your gross pay. On a KES 100,000 gross salary that is KES 2,750 a month. Because there is no graduated table and no cap, the figure scales directly with your gross pay. There is no separate claim to make, as the deduction is applied at source.
If your payslip still shows an old NHIF graduated figure, raise it with your payroll department, because NHIF was replaced by SHIF and the basis of the deduction has changed.
3. Utilise Mortgage Interest Relief
You can deduct interest on a loan to buy or build an owner-occupied residence, up to KES 30,000 per month (KES 360,000 per year). This cap was raised from the previous KES 25,000 per month by the Tax Laws (Amendment) Act 2024. The relief applies to interest only, not to the principal, and the loan must be from a specified financial institution.
For example, if you pay KES 30,000 a month in qualifying mortgage interest, the full amount can be deducted from your taxable income, which at the 30% marginal rate is worth about KES 9,000 a month in reduced PAYE. If your interest is lower than the cap, you deduct the actual interest paid.
Eligible lenders include registered banks and other specified financial institutions. Keep your annual interest certificate and loan statement, and claim the deduction through your return on iTax. Confirm the current cap and the list of specified institutions with KRA.
Home Ownership Requirements
The property must be your owner-occupied residence and the loan must come from a specified financial institution. You should be able to show the loan agreement, the lender interest certificate and proof that you occupy the home. Investment or rental property does not qualify for this relief.
Prepare a checklist of key documents to support your claim. These include:
- Title deed or sale agreement showing ownership.
- Lender interest certificate detailing interest paid that year.
- Loan agreement confirming the purpose was an owner-occupied home.
Submit the claim through iTax with your annual return and keep the records in case KRA asks to verify them.
4. Claim Insurance Relief
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Insurance relief is given at 15% of premiums paid on qualifying life, health and education policies, capped at KES 5,000 per month (KES 60,000 per year), under the Income Tax Act. It is a relief set against your tax, not a deduction from taxable income, and it is separate from SHIF.
For example, premiums of KES 4,000 a month give relief of 15% of KES 4,000, which is KES 600 a month. Premiums high enough to push the 15% figure above KES 5,000 a month are capped at KES 5,000. Note that SHIF is now deducted from taxable income rather than claimed here, so do not include SHIF in your insurance premium figure.
Keep premium receipts from a registered insurer showing your details and the policy number, and claim the relief on your return. Confirm the current cap with KRA.
5. Apply the Disability Exemption
A person with a disability who holds a valid exemption certificate from the National Council for Persons with Disabilities (NCPWD), endorsed by KRA, can have the first KES 150,000 per month (KES 1,800,000 per year) of income exempt from tax. The certificate is valid for a set period and must be renewed. This is the genuine relief available, and it applies up to that threshold rather than removing tax on any salary level.
The process starts with obtaining an assessment and exemption certificate from the NCPWD, then registering it with KRA so your payroll reflects the exemption.
- Obtain an NCPWD assessment and exemption certificate.
- Submit it to KRA so the exemption is applied.
- Your employer updates payroll to reflect the exempt threshold.
Keep your certificate and supporting medical records, and renew the certificate before it expires so the exemption continues to apply.
6. Use Tax-Free Benefits and Allowances Correctly
Some benefits are tax-free up to set limits. Non-cash benefits are exempt in aggregate up to KES 5,000 per month (KES 60,000 per year), and employer-provided meals are tax-free up to KES 5,000 per month (KES 60,000 per year). Structuring part of your package within these limits, where genuine and agreed with your employer, keeps that portion outside taxable pay.
These limits are aggregate monthly figures, not daily allowances, so confirm how your employer applies them. Company car and housing benefits are valued under KRA prescribed rules, so ask your payroll department how any such benefit is being valued rather than assuming a fixed figure.
Always keep the arrangement genuine and documented in your contract, because benefits that exceed the tax-free limits are taxable on the excess.
7. File Your Return and Reconcile Reliefs
The final lever is simply filing your annual return on time and making sure every relief and deduction you are entitled to is captured. If PAYE was over-deducted during the year, the return is where the position is reconciled and any refund is claimed. The return is due by 30 June.
Combine pension contributions, SHIF and housing levy deductions, mortgage interest relief, insurance relief and any disability exemption, and check that your P9A reflects them. Confirm the current caps and rules on the KRA iTax portal, since figures can change between Finance Acts.
Frequently Asked Questions
What are the main legal ways Kenyan employees can reduce their PAYE?
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The genuine levers are: pension contributions deductible up to KES 30,000 per month (KES 360,000 per year); SHIF at 2.75% of gross and the Affordable Housing Levy, both deducted from taxable income; mortgage interest relief up to KES 30,000 per month (KES 360,000 per year) on an owner-occupied home; insurance relief at 15% of premiums capped at KES 5,000 per month (KES 60,000 per year); the disability exemption on the first KES 150,000 per month with an NCPWD certificate; and the personal relief of KES 28,800 per year. Confirm the current caps on the KRA iTax portal.
Who is eligible to claim these reliefs?
All salaried employees registered with KRA via iTax can claim, provided they meet each relief's conditions and hold the supporting documents, such as pension scheme records, a lender interest certificate, insurance premium receipts or an NCPWD exemption certificate. You claim through your annual return or through your employer's payroll.
How much is pension relief worth?
Contributions to a registered pension scheme are deductible from taxable income up to KES 30,000 per month (KES 360,000 per year). Because it is a deduction, the saving depends on your marginal band, so an employee in the 30% band who contributes the full amount reduces PAYE by roughly KES 9,000 a month. Confirm the current cap on iTax.
Is SHIF claimed as insurance relief?
No. SHIF replaced NHIF on 1 October 2024 and is charged at 2.75% of gross pay with no cap. Since the Tax Laws (Amendment) Act 2024 it is deducted from taxable income, not claimed as a 15% insurance relief. Insurance relief at 15% applies separately to qualifying life, health and education premiums.
What is mortgage interest relief and how much can I claim?
It lets you deduct interest on a loan from a specified financial institution for an owner-occupied home, up to KES 30,000 per month (KES 360,000 per year), raised from the previous KES 25,000 by the Tax Laws (Amendment) Act 2024. Only interest qualifies, not principal, and you need a lender interest certificate to claim it.
How do I confirm the current figures?
Tax caps and bands can change between Finance Acts, so check the current bands, relief caps and deadlines on the KRA iTax portal or the official KRA notices before relying on any figure for your own filing.