Government Proposes PAYE Exemption for Over 1.5 Million Low-Income Workers
News Updated: 02 February 2026 17:03 EAT
Cabinet Secretary for treasury John Mbadi
The Government of Kenya has announced a proposal to exempt more than 1.5 million employed Kenyans earning below KSh 30,000 per month from Pay As You Earn (PAYE) tax, aiming to ease the financial burden on low-income households.
Treasury Cabinet Secretary John Mbadi revealed the plan during a public forum in Kiambu, noting that the measure has the support of President William Ruto and will be submitted to Parliament for approval. Mbadi said taxing low-income earners has eroded their disposable income, making it harder to cover essentials such as food, rent, transport, and school fees.
Out of about 3 million salaried Kenyans, roughly 1.5 million earn KSh 30,000 or less per month, making them potential beneficiaries of the exemption. The government also plans to reduce PAYE rates for those earning between KSh 30,000 and KSh 50,000, easing the tax burden for another segment of workers.
Mbadi described the policy as part of broader reforms to make Kenya’s tax system fairer and to cushion households amid rising living costs and inflationary pressures. Business groups and critics have long argued that the current PAYE structure disproportionately affects lower-paid workers, reducing take-home pay and consumer spending.
The exemption still requires parliamentary approval and will likely be included in the 2026 Finance Bill. Lawmakers will assess the potential revenue impact and consider measures to offset any shortfall.
Officials emphasized that improved tax compliance and enforcement against evasion will help protect government revenue even as relief measures are introduced.
If enacted, the exemption could significantly boost take-home pay for millions of low-income workers and reshape Kenya’s tax landscape, providing a notable relief to households across the country.
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FELIX MAKONA
FACT FINDER AND DATA DRIVEN JOURNALIST. DATA MINING AT IT'S BEST. GET FACTS RANGING FROM MATTERS DISABILITY AND INCLUSION, POLITICS, ECONOMY, SPORTS AND GENERAL NEWS AROUND THE WORLD