Kenyan workers are set to receive significant financial relief as President William Ruto pushes forward with comprehensive PAYE tax reforms that could put up to Sh2,000 back in workers’ pockets every month. The tax relief package represents one of the most substantial fiscal policy shifts in recent Kenyan history.
The centerpiece of the reforms is the complete elimination of income tax for workers earning up to Sh30,000 per month. This move alone will benefit millions of low-income earners who currently pay 10% PAYE on earnings up to Sh24,000. The policy change means these workers will keep their full salaries without tax deductions.
For middle-income earners, the proposals include lowering the 30% tax bracket to 25%, providing relief across a broader income spectrum. According to Treasury projections, workers at different income levels will see net pay increases ranging from Sh731 to over Sh2,000 monthly, depending on their earnings.
The tax-free threshold is also being increased to Sh30,000, up from the current level, marking a significant expansion of tax relief. This adjustment recognizes the rising cost of living and aims to provide workers with more disposable income to meet their daily needs.
Treasury Cabinet Secretary John Mbadi had initially expressed concerns about the reforms, noting they would cost the government approximately Sh40 billion in lost revenue. However, President Ruto overruled these objections, prioritizing worker welfare over immediate fiscal concerns.
To offset the revenue loss, the government plans to widen the personal income tax base by bringing more high-income earners into the tax net and improving compliance. The Treasury has been running simulations to assess the overall economic impact of these changes.
For Kenyans, this tax relief comes at a crucial time when household budgets are stretched thin. The extra money could be used for savings, investments, or meeting essential needs. Financial experts recommend using the additional income wisely—consider setting up an emergency fund or investing in income-generating assets.
You can read the complete details in the original report at Nairobi Wire.
To make the most of your tax savings, consider opening a high-yield savings account or exploring investment opportunities through platforms like M-Akiba bonds or unit trusts to grow your wealth over time.