Kenya proposes income tax exemption for low earners

President William Ruto has announced a proposal to exempt Kenyan workers earning Sh32,333 or less per month from Pay As You Earn (PAYE) income tax. The National Treasury is expected to table a Bill in the National Assembly next week to implement these changes, which aim to increase disposable income for low-earning households.

Under the proposed legislation, the untaxed income threshold would rise from Sh24,000 to Sh32,333. This shift would involve the removal of the current Sh2,400 monthly personal relief for all workers. Treasury Cabinet Secretary John Mbadi noted that while the lowest earners would be exempt, the plan is designed to shift the tax burden toward higher earners to offset revenue losses.

Estimates suggest that employees earning between Sh32,334 and Sh50,000 could see their income tax drop by up to Sh596. Conversely, higher earners will face increases: those earning Sh60,000 are expected to pay an additional Sh473, while those earning Sh200,000 could see an increase of Sh3,867. The proposal must receive parliamentary approval before implementation.