Working out PAYE with the Kenyan tax bands
How a Kenyan employee's monthly PAYE is worked out from KRA's tax bands and personal relief, with a worked example in words and a way to check a payslip.
By Achekam · · 4 min read · For Running a business businesses in Kenya
"Why is my PAYE this figure?" Every payroll administrator hears the question, usually from someone who has just had a pay rise and expected more of it to reach their account. The answer should not be "the system worked it out". Kenyan PAYE follows a method simple enough to do with a calculator, and knowing it lets you explain a payslip, check a new payroll set-up and catch errors before they reach KRA.
The method has three steps: find taxable pay, apply the bands slice by slice, then subtract the reliefs.
The monthly bands KRA publishes
KRA says employers must apply these monthly PAYE bands, introduced by the Finance Act 2023 with effect from 1 July 2023:
| Slice of monthly taxable pay | Rate on that slice |
|---|---|
| The first KShs 24,000 | 10% |
| The next KShs 8,333 | 25% |
| The next KShs 467,667 | 30% |
| The next KShs 300,000 | 32.5% |
| Everything above KShs 800,000 | 35% |
The bands have not changed since: they are in force since 1 July 2023 and unchanged by the Finance Acts 2025 and 2026.
The table is read as slices. Each rate applies only to the part of pay that falls inside its band. A rise that pushes someone into the 30% band is taxed at 30% only on the part above the earlier slices; the rest of their pay is taxed exactly as before. Nobody takes home less because a rise moved them into a higher band.
Taxable pay comes first
The bands apply to taxable pay, not gross pay. Since 27 December 2024, Kenyan employees' SHIF and Affordable Housing Levy contributions are deductible from taxable pay, and pension contributions are deductible up to KES 30,000 a month. The same change allows post-retirement medical fund contributions up to KES 15,000 and mortgage interest up to KES 30,000 a month.
A hand calculation that applies the bands to gross pay will not match a payslip on which these deductions apply, so start from taxable pay. Deductions that reduce taxable pay goes through them in detail.
Personal relief
KRA says personal relief for resident individuals is KShs 2,400 a month, or KShs 28,800 a year. Relief comes off the tax, not off the pay: you work out the tax from the bands, then subtract the relief.
Some employees also receive insurance relief. The Income Tax Act sets it at fifteen per cent of premiums paid, up to sixty thousand shillings a year, and it too is subtracted from the tax. Insurance relief on Kenyan payslips explains which policies qualify.
The annual bands in the Income Tax Act
The monthly bands are the payroll version of annual bands set in law. The Income Tax Act's Third Schedule, in the consolidated version on Kenya Law dated 1 July 2026, sets the individual rates at 10% on the first Ksh 288,000, 25% on the next Ksh 100,000, 30% on the next Ksh 5,612,000, 32.5% on the next Ksh 3,600,000 and 35% on all income over 9,600,000. KRA's PAYE page shows the same annual figures. Kenya Law notes that some amendments to that text had not yet been applied, which is another reason to take KRA's current page as your working reference.
The annual figures matter at year end, when each employee's P9A shows the year's pay and tax, and for anyone with income outside employment.
A worked example in words
Take an employee whose monthly taxable pay, after the allowable deductions, falls somewhere in the 30% band.
- Charge 10% on the first KShs 24,000. That slice always produces KShs 2,400 of tax.
- Charge 25% on the next KShs 8,333.
- Charge 30% on whatever taxable pay remains above those two slices.
- Add the three amounts together. That is the tax before relief.
- Subtract personal relief of KShs 2,400, and any insurance relief the employee is entitled to.
- What remains is the month's PAYE.
Notice what steps 1 and 5 show together: the tax on the first slice equals personal relief. An employee whose taxable pay does not go beyond the first band therefore has no PAYE to pay once personal relief is applied. Talk of a higher tax-free amount is a separate question, covered in is there a KES 30,000 tax-free threshold?
Confirming the tax table before Achekam runs payroll
Achekam's Kenyan payroll calculates PAYE with personal and insurance relief, alongside NSSF Tier I and II, SHIF, the Affordable Housing Levy and the NITA levy, and prepares the P10 schedule and each employee's P9A.
The bands come from a tax table that Achekam ships pre-loaded but unconfirmed; the Kenyan table shipped is for 2026. No payroll run uses a table until a named person confirms the business's own copy. Before you confirm, put the table beside KRA's PAYE page and check each band, each rate and the relief figures. That one check is the control that matters most for PAYE: every later payslip depends on it.
Checking a payslip yourself
When an employee queries their PAYE, or after any change to the payroll set-up, check one payslip by hand:
- Start from gross pay for the month.
- Subtract the contributions that are deductible from taxable pay.
- Apply the bands slice by slice to what remains.
- Subtract personal relief and any insurance relief.
- Compare your answer with the PAYE on the payslip.
If the figures differ, look first at taxable pay, then at reliefs, and only then at the bands.
KRA's PAYE page explains how employers deduct PAYE and remit it, with the bands and reliefs in force at the time of writing.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
