The Affordable Housing Levy in Kenya Explained (2026): Rates, Deadlines and How to Benefit
Who pays the 1.5% levy, how employers remit it, how it affects PAYE, and how contributors can apply for affordable homes.
The Affordable Housing Levy (AHL) is a statutory deduction under the Affordable Housing Act 2024. It funds the government's affordable housing programme and appears as its own line on every Kenyan payslip. Here is how it works in 2026.
The Rates
| Who | Rate |
|---|---|
| Employee | 1.5% of gross monthly salary |
| Employer | A matching 1.5% of the employee's gross salary |
| Non-employed persons | 1.5% of gross income received, where applicable under the Act |
So an employee on KES 60,000 contributes KES 900 a month and the employer adds another KES 900.
Remittance and Deadlines
Employers deduct the levy through payroll and remit it to KRA, which collects it on behalf of the Affordable Housing Board. The deadline is the 9th working day after the end of the month in which the deduction was made. Late payment attracts a penalty of 3% of the unpaid amount per month, so it should be built into the same payroll routine as PAYE.
How It Affects Your Tax
When the levy started, employees received a 15% affordable housing relief. Since 27 December 2024, that relief was replaced: the levy is now an allowable deduction, subtracted from gross pay before PAYE is calculated, alongside SHIF and NSSF. See our PAYE guide for the full calculation.
Can You Get a House From It?
Contributors can apply for units under the affordable housing programme through the government's Boma Yangu platform. Units are allocated according to the programme's rules, and buyers typically pay through tenant-purchase or mortgage arrangements. Contributions can also be used to support a home purchase under the programme's terms. Contributors who do not get a house are entitled, under the Act, to have their contributions refunded after a set period or at retirement age — check the current rules with the Affordable Housing Board, as implementation details are still evolving.
What Employers Should Check
- Calculate the levy on gross salary, including taxable allowances.
- Remit the employer and employee portions together by the 9th working day.
- Show the levy separately on payslips.
- Keep remittance receipts for KRA audits.
Worked Examples
| Gross monthly salary | Employee levy (1.5%) | Employer levy (1.5%) | Total remitted |
|---|---|---|---|
| KES 25,000 | KES 375 | KES 375 | KES 750 |
| KES 50,000 | KES 750 | KES 750 | KES 1,500 |
| KES 100,000 | KES 1,500 | KES 1,500 | KES 3,000 |
| KES 250,000 | KES 3,750 | KES 3,750 | KES 7,500 |
There is no upper cap, so the levy grows in line with salary. Because it is now an allowable deduction, a higher earner in the 30% PAYE band effectively pays about 70% of the headline levy after the tax saving.
How the Levy Developed
The housing levy was first introduced through the Finance Act 2023. After the courts found problems with how it had been introduced, Parliament passed the Affordable Housing Act 2024, which gave the levy a dedicated legal basis and created the Affordable Housing Fund and Board to manage the money. The current rules — 1.5% from employees and employers, collected by KRA — come from that Act.
What Employers Should Watch For
- New hires and leavers: calculate the levy on the actual gross pay for the month, including partial months.
- Allowances and bonuses: taxable allowances and bonuses form part of gross salary, so they attract the levy in the month paid.
- Casual and contract staff: check whether payments are employment income, in which case the levy applies.
- Payroll software: make sure your system deducts the levy before computing PAYE, in line with the December 2024 change.
- Records: keep payroll registers and KRA payment receipts for at least five years.
Planning Your Own Finances
For employees, the levy is a fixed cost to build into your budget. If you hope to own a home, look at the programme's projects in your area and register on Boma Yangu to see eligibility and pricing. If you are already saving through a SACCO, compare SACCO mortgage or development loans with the affordable housing tenant-purchase terms before committing — the right choice depends on location, price and repayment period.
Housing Levy -- FAQ
What is the housing levy rate in Kenya?
1.5% of gross salary from the employee and a matching 1.5% from the employer.
Is the housing levy tax-deductible?
Yes. Since December 2024, it is an allowable deduction that reduces taxable pay before PAYE is calculated.
Who collects the housing levy?
KRA collects it on behalf of the Affordable Housing Board, through the same systems used for payroll taxes.
Is the housing levy charged on allowances?
Yes. The levy is calculated on gross salary, which includes taxable allowances and bonuses paid in the month.
Do self-employed people pay the housing levy?
The Affordable Housing Act applies the levy to non-employed persons on gross income received in certain circumstances. Self-employed people should check current KRA guidance for how it applies to them.
Final Thoughts
The Affordable Housing Levy is a flat 1.5% from employees and 1.5% from employers, remitted to KRA by the 9th working day. Since it is now deducted before PAYE, it costs employees a little less than the headline rate suggests — and contributors can use the scheme to work towards a home.