In a bold move that will bring relief to millions of Kenyan workers, President William Ruto has overruled Treasury concerns and approved a complete PAYE tax exemption for low-income earners. Speaking at the National Prayer Breakfast at Safari Park in Nairobi, the President confirmed that workers earning up to Sh30,000 per month will no longer pay income tax.
The decision comes despite Treasury Cabinet Secretary John Mbadi’s warnings that the tax relief would cost the government approximately Sh40 billion in lost revenue. “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 declared.
Currently, workers earning up to Sh24,000 pay PAYE at 10%, but under the new directive, this group along with those earning up to Sh30,000 will be completely exempt. The move is expected to put between Sh731 and over Sh2,000 back into workers’ pockets monthly, depending on income levels.
Treasury CS Mbadi had previously stated that the PAYE relief did not feature in the proposed Finance Bill 2026, citing the need for revenue simulations and budget balancing. However, the President’s directive now makes it a priority.
The government plans to offset the revenue loss by widening the personal income tax base and implementing other tax reforms. For middle-income earners, the proposals also suggest lowering the 30% tax bracket to 25%, providing additional relief across income levels.
This development represents a significant shift in Kenya’s tax policy, prioritizing the welfare of low-income workers over immediate revenue concerns. You can read more details in the original report at Nairobi Wire.
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