PAYE Tax Rates in Kenya 2026: How to Calculate Your Net Salary (With Examples)
The 2026 PAYE bands, every statutory deduction on your payslip, and worked examples for KES 30,000, 50,000 and 100,000 salaries.
Your payslip in Kenya shows a gross salary at the top and a much smaller figure at the bottom. The gap is made up of four statutory deductions — PAYE, SHIF, NSSF and the Affordable Housing Levy — and understanding how each is calculated helps you check your pay, negotiate offers properly and plan your finances. This guide sets out the 2026 rates and walks through real examples.
PAYE Tax Bands for 2026 (Monthly)
| Monthly taxable pay | Rate |
|---|---|
| First KES 24,000 | 10% |
| Next KES 8,333 (24,001 — 32,333) | 25% |
| Next KES 467,667 (32,334 — 500,000) | 30% |
| Next KES 300,000 (500,001 — 800,000) | 32.5% |
| Above KES 800,000 | 35% |
Every resident employee also gets personal relief of KES 2,400 per month, which is subtracted from the tax calculated. In practice this means someone earning a taxable KES 24,000 or less pays no PAYE.
The Finance Bill 2026 passed by Parliament proposes revised PAYE bands that are expected to take effect from 1 January 2027, so the bands above apply to salaries paid in 2026. Check KRA for the gazetted bands before running January 2027 payroll.
The Order Deductions Are Calculated In
Since late December 2024, SHIF contributions and the Housing Levy are deducted from gross pay before PAYE is calculated (they replaced the old insurance-style reliefs). NSSF contributions are also deductible. So the sequence is:
- Start with gross pay.
- Deduct NSSF (6% of pensionable pay, capped — see below).
- Deduct SHIF (2.75% of gross).
- Deduct the Housing Levy (1.5% of gross).
- What remains is taxable pay. Apply the PAYE bands, then subtract the KES 2,400 personal relief.
- Net pay = gross minus NSSF, SHIF, Housing Levy and PAYE (and any voluntary deductions such as loans or SACCO contributions).
Statutory Deduction Rates at a Glance
| Deduction | Employee rate | Notes |
|---|---|---|
| NSSF | 6% of pensionable pay | From February 2026: Tier I up to KES 9,000, Tier II up to KES 108,000; maximum KES 6,480 a month |
| SHIF (SHA) | 2.75% of gross pay | Minimum KES 300 a month, no maximum |
| Housing Levy | 1.5% of gross pay | Employer pays a matching 1.5% |
| PAYE | Bands above | Less KES 2,400 personal relief |
Worked Example: KES 50,000 Gross
- NSSF: 6% of 50,000 = KES 3,000
- SHIF: 2.75% of 50,000 = KES 1,375
- Housing Levy: 1.5% of 50,000 = KES 750
- Taxable pay: 50,000 - 3,000 - 1,375 - 750 = KES 44,875
- Tax: 10% of 24,000 (2,400) + 25% of 8,333 (2,083.25) + 30% of 12,542 (3,762.60) = 8,245.85
- Less personal relief 2,400 = PAYE KES 5,845.85
- Net pay: about KES 39,029
Quick Reference: Approximate Net Pay
| Gross monthly salary | NSSF | SHIF | Housing Levy | PAYE | Approx. net pay |
|---|---|---|---|---|---|
| KES 30,000 | 1,800 | 825 | 450 | about 731 | about KES 26,194 |
| KES 50,000 | 3,000 | 1,375 | 750 | about 5,846 | about KES 39,029 |
| KES 100,000 | 6,000 | 2,750 | 1,500 | about 19,308 | about KES 70,442 |
Figures are rounded and assume no other deductions or benefits. Employers may treat certain allowances and benefits differently, so use this to sanity-check rather than replace your payroll.
Tips to Legally Reduce Your Tax
- Pension contributions to a registered scheme are deductible up to KES 30,000 a month, reducing taxable pay.
- Mortgage interest on an owner-occupied home is deductible up to the statutory limit.
- Insurance relief of 15% of qualifying life, education or health premiums, up to KES 5,000 a month.
- Persons with disability can apply for an exemption certificate covering the first KES 150,000 of monthly income.
- File your annual return accurately and on time to claim reliefs your employer did not apply — see our P9 returns guide.
PAYE for Directors, Casuals and Second Jobs
Company directors who receive salaries are taxed through PAYE like other employees. Casual workers paid as employees are also subject to PAYE where their earnings exceed the tax-free level. If you hold a second job, the second employer often deducts tax without personal relief, and your annual return may still show additional tax payable — see our P9 returns guide.
PAYE in Kenya -- FAQ
How much salary is tax-free in Kenya?
With the KES 2,400 personal relief, taxable pay of up to KES 24,000 a month attracts no PAYE. Because SHIF, NSSF and the Housing Levy are deducted first, the gross salary at which PAYE starts is somewhat higher.
Is SHIF deducted before PAYE?
Yes. Since December 2024, SHIF contributions and the Housing Levy are allowable deductions, so they reduce taxable pay before PAYE is calculated.
What is the highest PAYE rate in Kenya in 2026?
35%, applied to monthly taxable pay above KES 800,000.
Which allowances are taxable in Kenya?
Most cash allowances, such as house, transport and responsibility allowances, are taxable as part of gross pay. Some reimbursements and specific benefits have special treatment under the Income Tax Act.
Final Thoughts
PAYE in Kenya follows a clear sequence: deduct NSSF, SHIF and the Housing Levy, apply the five tax bands, then subtract personal relief. Once you know the order, checking your payslip takes two minutes. Keep an eye on the revised bands expected from January 2027, and if you run a business and want payroll handled properly, it pays to get professional help.