Kenya PAYE Tax Explained: 2025 Deductions Breakdown
Understanding PAYE (Pay As You Earn) in Kenya is essential for both employees and employers in 2025. From new tax bands to revised deductions like the Affordable Housing Levy and Social Health Insurance Fund (SHIF), knowing your take-home pay has never been more important.
1. PAYE Tax Rates in Kenya (Effective 2025)
Based on the Finance Act 2023, the following progressive PAYE tax brackets apply:
| Monthly Income (Ksh) | Annual Equivalent | Rate |
|---|---|---|
| Up to 24,000 | Up to 288,000 | 10% |
| 24,001 – 32,333 | Up to 388,000 | 25% |
| 32,334 – 500,000 | Up to 6,000,000 | 30% |
| 500,001 – 800,000 | Up to 9,600,000 | 32.5% |
| Above 800,000 | Over 9,600,000 | 35% |
These rates are progressive—meaning the more you earn, the more tax you pay on each bracketed portion.
2. Statutory Reliefs and Exemptions
- Personal Relief: Ksh 2,400 per month
- Insurance Relief: 15% of premiums (up to Ksh 60,000 per year)
- Non-taxable Benefits: Medical cover, meals ≤ Ksh 5,000, and approved pension contributions
3. Other Mandatory Deductions in 2025
- NSSF: 6% of earnings, up to Ksh 4,320 monthly (employer + employee combined)
- SHIF (NHIF replacement): 2.75% of gross salary
- Affordable Housing Levy: 1.5% from employee matched by employer
4. Sample Salary Breakdown – Ksh 100,000
Here’s how PAYE and other deductions might apply for an employee earning Ksh 100,000 gross salary per month:
- PAYE: ~Ksh 19,000
- NSSF: ~Ksh 2,160
- SHIF: Ksh 2,750
- Housing Levy: Ksh 1,500
- Net Salary: ~Ksh 74,590
This breakdown helps Kenyan employees estimate what will hit their bank account each month.
5. PAYE Submission Deadlines and Penalties
- Employers must file and pay PAYE by the 9th of the following month
- Filing is done via the KRA iTax portal
- Late filing: 25% of tax due or Ksh 10,000 minimum
- Late payment: 5% penalty + 1% interest monthly
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Conclusion: Plan Smart, Pay Right
With Kenya’s 2025 PAYE tax system, transparency is key. Use a salary calculator to determine your deductions before payday. Whether you earn Ksh 30,000 or Ksh 300,000, understanding your statutory deductions empowers you to budget better and stay compliant with KRA.
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