Kenya PAYE in 2026: tax bands, rates & how to work out net pay

PAYE (Pay As You Earn) is the income tax your employer deducts from your salary each month and remits to the Kenya Revenue Authority. This guide covers the 2026 tax bands, the personal relief, and — the part most people get wrong — how PAYE sits alongside SHIF, NSSF and the Housing Levy to arrive at the net pay that lands in your account.

What is PAYE?

PAYE is not a separate tax — it is simply income tax collected at source. Rather than employees paying a lump sum at year end, employers withhold the right amount each month and pay it to KRA by the 9th of the following month, together with a P10 return. Because it is deducted before you are paid, PAYE is the single biggest line on most Kenyan payslips.

The 2026 PAYE tax bands

Kenya uses a graduated system: different slices of your pay are taxed at different rates. Only the portion of income that falls inside each band is taxed at that band's rate — a common misconception is that crossing into a higher band taxes your whole salary at the higher rate. It does not.

Monthly taxable pay (KES)	Rate
On the first 24,000	10%
On the next 8,333 (24,001 – 32,333)	25%
On the next 467,667 (32,334 – 500,000)	30%
On the next 300,000 (500,001 – 800,000)	32.5%
On everything above 800,000	35%

Personal relief: KES 2,400 a month

Every resident employee gets a personal relief of KES 2,400 per month (KES 28,800 a year). This is subtracted after the banded tax is calculated. In practice it means the first chunk of your PAYE is wiped out — anyone earning below roughly KES 24,000 in taxable pay ends up with no PAYE at all.

The step most people miss: taxable pay ≠ gross pay

Here is the key point. PAYE is not charged on your gross salary. It is charged on your taxable pay, which is your gross pay after deducting three things that KRA treats as allowable:

• NSSF — 6% of pensionable pay, up to KES 72,000 (max KES 4,320)
• SHIF — 2.75% of gross pay (min KES 300)
• Affordable Housing Levy — 1.5% of gross pay

So the order of operations is: work out NSSF, SHIF and the Housing Levy first, subtract them from gross to get taxable pay, then apply the PAYE bands and the relief.

A worked example: KES 95,920 gross

Let's run a real salary through end to end.

Step	Amount (KES)
Gross pay	95,920
Less NSSF (6% capped at 72,000)	4,320
Less SHIF (2.75%)	2,638
Less Housing Levy (1.5%)	1,439
Taxable pay	87,523
Banded tax (before relief)	21,040
Less personal relief	2,400
PAYE	18,640
Net pay (gross − PAYE − SHIF − NSSF − Housing)	68,883

The banded tax of 21,040 comes from: 10% of the first 24,000 (2,400) + 25% of the next 8,333 (2,083) + 30% of the remaining 55,190 (16,557). Subtract the 2,400 relief and you get PAYE of 18,640.

What employers must remember

• File and pay by the 9th. PAYE, together with the P10 return, is due by the 9th of the month after the payroll month. Late filing attracts penalties and interest.
• Insurance and pension relief. Beyond personal relief, employees may qualify for insurance relief and other allowable reliefs — these reduce PAYE further and should be captured in payroll.
• Keep P9 forms. Each employee needs an annual P9 showing their pay and PAYE, which they use to file their individual tax return.

How Yolaworks handles all of this

Doing this for one salary is manageable. Doing it for a whole team, every month, with reliefs, mid-month joiners and bonuses, is where spreadsheets break. Yolaworks payroll computes PAYE, SHIF, NSSF and the Housing Levy for every employee automatically, generates payslips and P9s, produces KRA-ready P10 returns, and pays staff by M-PESA or bank file — in one run. You can try it free for 30 days with no payment.