Where Your 2026 Payslip Rules Actually Come From
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Two laws shape the deductions on a Kenyan payslip today. The Finance Act 2023 set the current PAYE bands, which run from 10% to 35%. The Tax Laws (Amendment) Act 2024, effective 27 December 2024, brought in the SHIF and housing levy as deductions from taxable income and raised the pension contribution cap.
The Finance Act 2025 did not change the PAYE bands, the rates, the personal relief, or those relief caps. So when people ask what the latest Finance Act means for their salary, the accurate answer for the core PAYE computation is: no change to the bands or rates.
This matters because a lot of online content invents new bands or relief figures each year. The durable facts are the ones above. Where you are unsure exactly what a given Finance Act did, rely on the framework here and confirm specifics with KRA rather than assuming a change.
- PAYE bands and rates: set by the Finance Act 2023, still current.
- SHIF, housing levy, pension cap: changed by the Tax Laws (Amendment) Act 2024.
- Finance Act 2025: did not change the core PAYE computation.
Confirm any rate-sensitive figure on the KRA iTax portal before relying on it.
The PAYE Bands That Apply
The PAYE bands are progressive, so only the portion of income in each band is taxed at that band's rate. These are the bands from the Finance Act 2023, unchanged by the Finance Act 2025.
| Monthly Taxable (KES) | Annual (KES) | Marginal 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 top rate is 35%, applying only to income above KES 800,000 a month. There is no higher band. Personal relief is KES 2,400 a month (KES 28,800 a year), unchanged.
Employers compute PAYE on taxable income, which is gross pay after SHIF, NSSF, the housing levy, and any qualifying pension contribution. Then they apply the personal relief. Confirm the bands on the KRA iTax portal.
Personal Relief and Other Caps
Personal relief is KES 2,400 a month for every taxpayer. The qualifying pension contribution is deductible up to KES 30,000 a month (KES 360,000 a year), raised by the Tax Laws (Amendment) Act 2024. Mortgage interest relief on an owner-occupied loan from a specified institution is up to KES 30,000 a month (KES 360,000 a year). Insurance relief is 15% of premiums, capped at KES 5,000 a month.
| Item | Current Figure |
|---|---|
| Personal relief | KES 2,400/month (KES 28,800/year) |
| Pension contribution (deductible) | Up to KES 30,000/month (KES 360,000/year) |
| Mortgage interest relief | Up to KES 30,000/month (KES 360,000/year) |
| Insurance relief | 15% of premiums, max KES 5,000/month |
These are the figures that reduce your taxable income or final tax. Use them to plan, and confirm the current caps on the KRA iTax portal.
SHIF: A Current Deduction, Not a Proposal
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SHIF replaced NHIF on 1 October 2024 under the Social Health Insurance Act 2023, administered by the Social Health Authority. It is a current deduction, not a future proposal. The rate is 2.75% of gross monthly salary, with a minimum of KES 300 and no upper cap.
SHIF is a deduction from taxable income under the Tax Laws (Amendment) Act 2024, so it reduces the income on which PAYE is computed. There is no SHIF graduated table any more, and no KES 5,000 cap.
| Gross Salary (KES) | SHIF at 2.75% (KES) |
|---|---|
| 30,000 | 825 |
| 50,000 | 1,375 |
| 100,000 | 2,750 |
| 150,000 | 4,125 |
Because there is no cap, SHIF keeps rising with gross pay. Confirm the current SHIF rate with KRA or the Social Health Authority.
The Affordable Housing Levy
The Affordable Housing Levy is 1.5% from the employee plus 1.5% from the employer, applied to gross salary. Its legal basis is the Affordable Housing Act 2024. The rate is not 2% or 2.5%.
For a gross salary of KES 100,000, the employee pays KES 1,500 and the employer adds KES 1,500. The levy is a deduction from taxable income under the Tax Laws (Amendment) Act 2024, not a relief item.
Employers remit the levy through KRA. Review your payslip to track this deduction. Confirm the current rate on the KRA iTax portal.
NSSF Contributions
NSSF is 6% of pensionable pay on each side, under the NSSF Act No. 45 of 2013, phased in tiers. The amounts are dated, so use the figures for the period that applies to your payslip.
| Item | Feb 2025 to Jan 2026 | From Feb 2026 |
|---|---|---|
| Lower Earnings Limit | KES 8,000 | KES 9,000 |
| Upper Earnings Limit | KES 72,000 | KES 108,000 |
| Max per side per month | KES 4,320 | KES 6,480 |
NSSF is capped at the upper earnings limit, so it does not keep rising on very high salaries. The maximum steps up from February 2026. Confirm the current limits with NSSF or on the KRA iTax portal.
Putting the Deductions Together
For a salaried employee, the monthly deductions are SHIF (2.75% of gross), NSSF (per the dated table), the housing levy (1.5% of gross), and PAYE on taxable income after the personal relief. Qualifying pension contributions and other reliefs reduce taxable income further.
Taxable income is gross pay minus SHIF, NSSF, the housing levy, and any qualifying pension contribution. PAYE is then computed on that figure using the bands, and the KES 2,400 personal relief is subtracted.
None of these figures changed because of the Finance Act 2025. They reflect the Finance Act 2023 bands and the Tax Laws (Amendment) Act 2024 changes. Use the KRA iTax PAYE calculator to work out your own net pay.
A Worked Illustration
Take a gross of KES 80,000 for the period to January 2026. SHIF is KES 2,200, the housing levy is KES 1,200, and NSSF is at the capped maximum of KES 4,320. Taxable income is about KES 72,280. Apply the bands to that figure, then subtract the KES 2,400 personal relief to get the PAYE.
The exact net depends on any pension contribution and other reliefs you claim. Confirm your own numbers with the KRA iTax calculator, since NSSF steps up from February 2026 and other figures can change.
Business and Other Taxes
For business owners, the durable framework facts are worth noting. Turnover Tax is 3% of gross turnover, for turnover above KES 1,000,000 and up to KES 25,000,000 a year, filed monthly. The Significant Economic Presence tax, introduced by the Tax Laws (Amendment) Act 2024 and effective 1 January 2025, replaced the Digital Service Tax.
Where you are unsure exactly what a given Finance Act changed for business taxes, state the framework above and confirm specifics with KRA rather than assuming a new rate. Do not rely on invented minimum-tax or turnover figures.
Consult a tax adviser for your specific business. Confirm the current rates and thresholds on the KRA iTax portal.
What Employees Should Do
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Keep your KRA PIN details current and check that your payslip reflects the correct deductions: PAYE on the verified bands, SHIF at 2.75%, the 1.5% housing levy, and NSSF for the period.
Verify that your employer applies the personal relief and any reliefs you are entitled to, such as a qualifying pension contribution or mortgage interest relief. Missing reliefs cost you money.
- Log into the iTax portal and confirm your profile and PIN are up to date.
- Check that your payslip deductions match the verified bands and rates using the KRA PAYE calculator.
- File your individual return by 30 June and claim any relief you are due.
- Confirm you are registered for SHIF and that 2.75% is being applied.
- Submit documents for insurance or mortgage interest relief through your employer.
Long-Term Financial Planning Tips
Even though the core PAYE rules are stable, good planning protects your take-home pay against the cost of living. Use the reliefs available and save consistently.
- Maximise a qualifying pension contribution, deductible up to KES 30,000 a month, to reduce taxable income.
- Claim mortgage interest relief on an eligible owner-occupied loan, up to KES 30,000 a month.
- Build an emergency fund covering several months of expenses.
- Use insurance relief where you hold qualifying policies, at 15% of premiums up to KES 5,000 a month.
- Review your reliefs each year and confirm the current caps with KRA.
Track your spending and deductions, and revisit your plan when rates change. Confirm any figure that affects your liability on the KRA iTax portal.
Frequently Asked Questions
Did the Finance Act 2025 change PAYE for salaries?
No. The Finance Act 2025 did not change the PAYE bands, the rates, the personal relief, or the main relief caps. The bands come from the Finance Act 2023, and the SHIF, housing levy, and higher pension deduction come from the Tax Laws (Amendment) Act 2024. Confirm the current figures on the KRA iTax portal.
What are the current PAYE tax bands?
The bands are 10% up to KES 24,000 a month, 25% to KES 32,333, 30% to KES 500,000, 32.5% to KES 800,000, and 35% above KES 800,000. Personal relief is KES 2,400 a month. These are set by the Finance Act 2023 and remain current.
How does the Finance Act 2025 affect my take-home pay?
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It did not change the core PAYE computation, so the bands, rates, and personal relief are the same. Your net pay reflects PAYE on the verified bands plus SHIF, NSSF, and the housing levy, which came from earlier laws. Use the KRA iTax calculator for your own figure.
What deductions apply to my salary now?
SHIF at 2.75% of gross (minimum KES 300, no cap), NSSF (6% per side, tiered and capped per the dated table), the Affordable Housing Levy at 1.5% from each of employee and employer, and PAYE on taxable income after reliefs. SHIF and the housing levy are deductible from taxable income.
Is SHIF a proposal or already in force?
SHIF is in force. It replaced NHIF on 1 October 2024 under the Social Health Insurance Act 2023, at 2.75% of gross with no upper cap. There is no NHIF graduated table any more and no KES 5,000 SHIF cap.
What is the Affordable Housing Levy rate?
The levy is 1.5% from the employee plus 1.5% from the employer, under the Affordable Housing Act 2024. It is not 2% or 2.5%. It is a deduction from taxable income, not a relief.
Where should I confirm the latest figures?
Use the KRA iTax portal, which carries the current PAYE bands, reliefs, and the PAYE calculator. Rates and limits change, including NSSF stepping up from February 2026, so confirm before relying on any figure.