In a major relief for low-income earners, President William Ruto has approved the removal of PAYE tax for workers earning up to Sh30,000 per month. Speaking at the National Prayer Breakfast at Safari Park in Nairobi, Ruto confirmed the decision despite Treasury concerns about a Sh40 billion budget impact.
“The Treasury came back and said, ‘Oh, Mr. President, you know this is going to be very big. You know it’s going to cost us Sh40 billion in this budget.’ I told them, ‘Let’s do it. Let’s do it,’” Ruto stated.
The tax relief will benefit workers earning up to Sh30,000, who currently pay PAYE at 10%. Treasury CS John Mbadi had previously indicated the measure wasn’t included in the Finance Bill 2026 due to revenue concerns, but the President’s directive overrides these reservations.
The proposals also suggest lowering the 30% tax bracket to 25% for middle-income earners, with workers expected to see net pay gains between Sh731 and over Sh2,000 depending on income levels. The government plans to widen the personal income tax base to offset the revenue loss from this relief measure.