The Kenyan government is set to provide significant tax relief for low- and middle-income earners, a move aimed at boosting household income and helping workers cope with rising living costs.
President William Ruto announced that salaried Kenyans earning up to Sh30,000 per month will be fully exempt from income tax, while those earning between Sh30,000 and Sh50,000 will see their PAYE rates reduced to 25 percent.
“1.5 million working Kenyans will not pay any taxes. Another 500,000 will have their taxes reduced. This is a practical, progressive approach to managing the cost of living from the bottom up,” the President said during a participation forum on budget processes in Meru town.
Treasury Cabinet Secretary John Mbadi highlighted that the government will also target high-income earners who are not fully compliant. Citing rental income, which should generate Sh100 billion in taxes annually, Mbadi noted that only Sh17 billion has been collected. “Once we address low-income tax relief, KRA will intensify monitoring to ensure that everyone earning significant income is contributing fairly,” he added.
The reforms follow recent calls from banks and Saccos to raise the tax-free salary threshold to Sh40,000 in response to inflation. They also align with broader discussions by the World Bank, which recommended reducing tax rates for mid-income earners while adjusting the top income tax rate to 38 percent.
Economic experts say the measures are not just about cutting taxes—they are intended to strengthen disposable income, stimulate consumer spending, and make the taxation system more equitable. The Tax Law Amendment Bill is expected to be presented to Parliament soon, marking the next step in formalizing the reforms.
