The government has announced plans to exempt more than 1.5 million employed Kenyans earning below Ksh.30,000 from paying Pay As You Earn (PAYE) tax.
Treasury Cabinet Secretary John Mbadi made the announcement on Monday while speaking in Meru, saying the proposal will be included in the Tax Laws Amendment Bill, which will be presented to Parliament ahead of the Finance Bill 2026.
CS Mbadi said the move was agreed upon with President William Ruto to ease the financial burden on low-income earners.
“We have agreed with the President that low-income earners should get relief. Anyone earning Ksh.30,000 and below should pay zero PAYE,” Mbadi said.
According to Treasury data, Kenya has about 3.65 million salaried workers, with approximately 1.5 million earning Ksh.30,000 or less.
The proposed reforms also include a 5 percent reduction in PAYE for Kenyans earning between Ksh.30,000 and Ksh.50,000, lowering the tax rate from 30 percent to 25 percent.
“We want to put more money in people’s pockets,” Mbadi added.
The tax relief measures are aimed at cushioning low- and middle-income earners from rising living costs and stimulating household spending to support economic recovery.
Currently, PAYE applies to workers earning as little as Ksh.24,000, a situation experts say has strained household incomes and weakened consumer demand.
If approved by Parliament, the reforms would mark a major shift in Kenya’s tax policy, offering relief to millions of workers struggling with the high cost of living.
