Complete Guide to Kenya PAYE Tax 2026 — KRA, SHIF, AHL Explained

Kenya's income tax system has undergone significant changes in recent years. The Finance Act 2023, the Social Health Insurance Act 2023, and subsequent court rulings on the Affordable Housing Levy have reshaped what Kenyan employees take home each month. This guide provides a complete and up-to-date breakdown of Kenya PAYE for 2026, covering the KRA 5-band system, the new SHIF contribution that replaced NHIF, the Affordable Housing Levy, NSSF Tier I and Tier II, and all available reliefs.

For an instant take-home pay calculation, use the AfroTools Kenya PAYE Calculator, which is updated for all 2026 deductions including SHIF and AHL. A Swahili version is also available at kikokotoo-kodi-mshahara.

What Are the 2026 KRA PAYE Tax Bands?

Kenya's PAYE system is administered by the Kenya Revenue Authority (KRA) under the Income Tax Act (Cap. 470). The tax is computed on monthly chargeable income — that is, gross salary minus allowable deductions (NSSF, SHIF) and before applying the personal relief. The 5-band system in place for 2026 is:

After computing the gross tax using these bands, you subtract the personal relief of KES 2,400 per month to arrive at your final PAYE liability. The result is that an employee earning KES 24,000 or less per month technically has a zero tax bill after the personal relief (10% × 24,000 = 2,400, minus personal relief of 2,400 = KES 0).

How Do Personal Relief and Disability Exemption Work?

Kenya's personal tax relief is a fixed credit subtracted directly from the calculated tax — not from income. In 2026, this stands at:

• Personal relief: KES 2,400 per month (KES 28,800 per year) — available to every resident employee
• Disability exemption: Persons registered as having a disability are entitled to a personal relief of up to KES 150,000 per month (KES 1,800,000 per year) under Section 56 of the Income Tax Act. This exemption applies to income up to the threshold, making it a near-total exemption for most persons with disability who are employed.
• Insurance relief: A relief of 15% of premiums paid on health, life, or education insurance, capped at KES 5,000 per month (KES 60,000 per year). Employees must submit documentation to their employers to claim this relief through payroll.

The personal relief of KES 28,800 per year represents the Kenyan government's minimum acknowledgment of the cost of living — it effectively means the first KES 28,800 of tax liability is extinguished before any tax is paid. Unlike Nigeria's CRA, which was calculated as a percentage of income, Kenya's relief is a flat cash amount, which is more beneficial to lower-income earners proportionally.

How Are NSSF Tier I and Tier II Contributions Calculated?

The National Social Security Fund (NSSF) in Kenya operates under the NSSF Act 2013, which restructured contributions from a flat KES 200/month to a tiered system based on earnings. The 2013 Act faced court challenges but has been progressively implemented:

NSSF contributions are deducted before PAYE is calculated, reducing your taxable income. For an employee earning KES 50,000 per month, the combined Tier I + Tier II employee contribution of approximately KES 1,080 reduces the chargeable income to approximately KES 48,920 before PAYE is applied.

NSSF contributions accumulate in your individual member account and grow with investment returns managed by the NSSF investment arm. At retirement (age 60, or from age 50 under certain conditions), you can access your savings as a lump sum or annuity.

What Is SHIF and How Does It Replace NHIF?

One of the most significant changes to Kenyan payroll in recent years was the replacement of the National Hospital Insurance Fund (NHIF) with the Social Health Insurance Fund (SHIF) effective October 2023. Key differences:

The shift to a percentage-based contribution means higher earners pay substantially more for SHIF than they did under NHIF. An employee earning KES 200,000 per month now contributes 2.75% × KES 200,000 = KES 5,500 per month to SHIF, compared to the maximum NHIF contribution of KES 1,700. However, the pre-tax nature of SHIF provides a partial offset — the SHIF deduction reduces taxable income, which lowers the PAYE calculation.

How Does the Affordable Housing Levy (AHL) 1.5% Work?

The Affordable Housing Levy was introduced through the Affordable Housing Act and survived a Supreme Court challenge in 2024. Its key features:

• Rate: 1.5% of gross monthly salary from the employee, matched by 1.5% from the employer
• Tax treatment: AHL is deducted from gross salary before PAYE is calculated (pre-tax), similar to SHIF
• Administration: Collected by KRA and remitted to the Affordable Housing Fund
• Nature: The AHL is a levy, not a personal savings account. Contributors do not build up an individual balance that can be withdrawn — unlike pension or NSSF contributions
• Purpose: Funds the government's affordable housing construction program targeting lower-income Kenyans

Combined, the SHIF (2.75%) and AHL (1.5%) add 4.25% of gross salary in new deductions compared to the pre-2023 regime, significantly reducing take-home pay especially for middle and upper-income earners. For example, an employee earning KES 150,000 per month faces SHIF of KES 4,125 and AHL of KES 2,250 — a combined KES 6,375 in new deductions per month.

How Does Mortgage Relief Reduce Your Tax?

Kenya provides specific tax relief for employees who have taken home loans for owner-occupied properties. Under Section 15(3)(b) of the Income Tax Act, mortgage interest payments are deductible from taxable income up to a ceiling of:

• KES 25,000 per month (KES 300,000 per year) for interest on a loan secured on your owner-occupied dwelling

To claim this relief through payroll, you must provide your employer's finance or HR department with: a copy of the mortgage agreement showing your name as borrower; the lender's name (must be a licensed financial institution); and monthly mortgage statements showing the interest component. The employer will then reduce your monthly PAYE calculation by the allowable interest amount before computing PAYE.

This relief is particularly valuable in Nairobi, where average mortgage loan sizes and corresponding interest payments frequently exceed the KES 25,000 monthly threshold, meaning many mortgaged homeowners can claim the full relief.

What Are Some Take-Home Pay Examples?

The following table shows approximate monthly take-home pay at various gross salary levels for 2026. Calculations assume the employee is a resident Kenyan with no insurance relief or mortgage relief, and NSSF at the Tier I + Tier II maximum of approximately KES 1,080:

For a more precise figure based on your exact salary structure and available reliefs, use the Kenya PAYE Calculator. To compare with sending money internationally as a Kenyan in the diaspora, the Remittance Comparison Tool shows the cheapest ways to send money to Kenya.

Frequently Asked Questions

What is the PAYE tax rate in Kenya for 2026?

Kenya uses a 5-band PAYE system: 10% on the first KES 24,000/month; 25% on the next KES 8,333; 30% on income from KES 32,334 to KES 500,000; 32.5% from KES 500,001 to KES 800,000; and 35% above KES 800,000. A personal relief of KES 2,400/month is then deducted from the calculated tax.

What replaced NHIF in Kenya?

NHIF was replaced by the Social Health Insurance Fund (SHIF) from October 2023. SHIF contributions are 2.75% of gross monthly income, deducted before PAYE (making them tax-advantaged), compared to the old fixed-band NHIF contributions that were post-tax.

What is the Affordable Housing Levy in Kenya?

The Affordable Housing Levy (AHL) is a 1.5% deduction from gross monthly salary, matched by a 1.5% employer contribution. It was upheld by Kenya's Supreme Court in 2024. Unlike pension contributions, AHL does not build up an individual savings balance — it is a levy that funds the government's housing program.

How does NSSF Tier I and Tier II work in Kenya?

Tier I is a flat KES 360/month from both employee and employer. Tier II applies 6% from both employee and employer on earnings between the lower earnings limit (≈KES 6,000) and upper earnings limit (≈KES 18,000). Combined, the maximum employee NSSF contribution is approximately KES 1,080/month. All NSSF contributions are pre-tax.

What is the personal relief amount for PAYE in Kenya 2026?

Every resident employee is entitled to a personal relief of KES 2,400 per month (KES 28,800/year), deducted directly from their computed tax. Persons with registered disabilities receive a much larger relief of up to KES 150,000/month (KES 1,800,000/year). Insurance relief of 15% of premiums (max KES 5,000/month) is also available with documentation.