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: gross salary minus allowable deductions such as NSSF, SHIF, AHL and qualifying relief items, before applying the personal relief. The 5-band system in place for 2026 is:
| Monthly Chargeable Income (KES) | Tax Rate | Tax on Band | Cumulative Max Tax |
|---|---|---|---|
| 0 - 24,000 | 10% | KES 2,400 | KES 2,400 |
| 24,001 - 32,333 | 25% | KES 2,083 | KES 4,483 |
| 32,334 - 500,000 | 30% | KES 140,300 | KES 144,783 |
| 500,001 - 800,000 | 32.5% | KES 97,500 | KES 242,283 |
| Above 800,000 | 35% | Variable | n/a |
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).
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Open Kenya PAYE CalculatorHow 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 effectively means the first KES 28,800 of annual 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. NSSF's Year 4 notice for 2026 increases the lower and upper earnings limits used in payroll calculations:
| Contribution Type | Description | Employee | Employer |
|---|---|---|---|
| Tier I | 6% on earnings up to the lower earnings limit (LEL KES 9,000) | Up to KES 540/month | Up to KES 540/month |
| Tier II | 6% of earnings between LEL and UEL (UEL KES 108,000) | 6% of band | 6% of band |
| Combined max | For earnings at or above UEL | KES 6,480/month | KES 6,480/month |
NSSF contributions are deducted before PAYE is calculated, reducing your taxable income. From February 2026, an employee earning at or above KES 108,000 can have an employee NSSF contribution of KES 6,480 when both Tier I and Tier II apply. Lower earners contribute 6% of pensionable earnings within the applicable bands.
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). KRA now treats SHIF contributions as deductible in determining taxable employment income. Key differences:
| Feature | Old NHIF | New SHIF |
|---|---|---|
| Contribution method | Fixed amount by income band (KES 150 to 1,700) | KES 300 up to KES 5,999 gross pay; 2.75% of gross salary from KES 6,000 and above |
| Tax treatment | Not deductible (post-tax) | Pre-tax (deducted before PAYE) |
| Employer match | None for private employees | None (employee only) |
| Minimum contribution | KES 150/month | KES 300/month (implied for very low earners) |
| Coverage | Employee + dependents | Employee + dependents |
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% times KES 200,000 = KES 5,500 per month to SHIF, compared to the former maximum NHIF contribution of KES 1,700. However, the pre-tax nature of SHIF provides a partial offset because the SHIF deduction reduces taxable income before PAYE is calculated.
How Does the Affordable Housing Levy (AHL) 1.5% Work?
The Affordable Housing Levy is collected by KRA under the Affordable Housing Act, 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 payroll deductions compared to the pre-SHIF and pre-AHL regime. 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 before factoring in the PAYE reduction from deductible treatment.
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Open Tanzania PAYE CalculatorHow 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 uses the Year 4 lower and upper earnings limits:
| Monthly Gross (KES) | NSSF | SHIF (2.75%) | AHL (1.5%) | PAYE | Take-Home (KES) |
|---|---|---|---|---|---|
| 30,000 | 1,800 | 825 | 450 | 731 | 26,194 |
| 60,000 | 3,600 | 1,650 | 900 | 8,538 | 45,312 |
| 100,000 | 6,000 | 2,750 | 1,500 | 19,308 | 70,442 |
| 200,000 | 6,480 | 5,500 | 3,000 | 47,889 | 137,131 |
| 500,000 | 6,480 | 13,750 | 7,500 | 134,064 | 338,206 |
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.
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Compare Remittance ServicesFrequently 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). KRA's SHIF calculator applies KES 300 for gross pay up to KES 5,999 and 2.75% of gross monthly income from KES 6,000 and above. KRA PAYE guidance treats SHIF contributions as deductible before taxable employment income is computed.
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. KRA collects the levy under the Affordable Housing Act, 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?
From February 2026, NSSF Year 4 uses a lower earnings limit of KES 9,000 and an upper earnings limit of KES 108,000. Tier I and Tier II are each calculated at 6%, and the maximum employee contribution is KES 6,480 per month when both tiers apply. NSSF contributions are deducted before PAYE.
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.