Kenya Treasury proposes raising PAYE tax exemption threshold

Kenya's National Treasury has proposed raising the monthly Pay As You Earn (PAYE) tax-free threshold from KSh24,000 to KSh32,333. If approved by Parliament, the measure is intended to take effect in January.

National Treasury Cabinet Secretary John Mbadi stated that the change would exempt an additional 362,846 salaried workers from income tax. This would increase the total number of tax-exempt formally employed Kenyans from approximately 1.329 million to 1.692 million.

The proposal, directed by President William Ruto, aims to provide relief to low-income earners facing cost-of-living pressures. Workers earning within the new threshold would see an immediate net monthly increase of approximately KSh2,083. Mbadi noted that the decision follows signs of macroeconomic recovery, allowing the government to redistribute fiscal gains to households that supported economic stabilization measures since 2022.