Salaried Kenyans could soon see lower tax deductions on their payslips after Treasury Cabinet Secretary John Mbadi announced plans to introduce legislation aimed at reducing Pay As You Earn (PAYE) charges.
Speaking on Wednesday, July 22, during the launch of the 2027/28 Medium-Term Budget Preparation Process in Nairobi, Mbadi said the National Treasury will begin public consultations next month on proposed tax relief measures before submitting a final report to President William Ruto by the end of August.
The proposals are expected to be presented to Parliament in September 2026 for consideration and possible approval.
If enacted, the changes could provide tax relief to more than 3.4 million salaried workers across Kenya by reducing the amount deducted from their monthly incomes.
“I know the concern has been on the payslip. Next month I am embarking on public engagement to reduce the tax burden on payslips. Some of you thought we had shelved that idea, but we have not,” Mbadi said.
“We have agreed with the President that I will bring back the report by the end of August, then legislation in September so that Kenyans get relief on their payslips,” he added.
Mbadi revealed that one of the proposals under consideration is to exempt employees earning up to Ksh30,000 per month from PAYE deductions.
The proposal also includes reducing the PAYE rate for workers earning between Ksh30,000 and Ksh50,000 to 25 per cent.
However, the CS said the government has received other suggestions from stakeholders, including a proposal for a 5 per cent reduction in PAYE rates across all income categories.
He said all proposals will undergo public participation and detailed review before the government makes a final decision.
The planned tax relief comes after concerns emerged when PAYE reductions did not feature in the Finance Bill 2026, which was recently passed into law despite earlier commitments from the President and Treasury.
President William Ruto had previously pledged to eliminate PAYE deductions for workers earning below Ksh30,000 per month and reduce the tax burden for those earning between Ksh30,000 and Ksh50,000.
In May, Ruto said he had instructed the National Treasury to develop proposals aimed at increasing workers’ disposable income by reducing payroll taxes.
The President acknowledged that removing PAYE for lower-income earners could create a revenue gap of about Ksh40 billion but said the government was exploring alternative ways to grow the economy without placing excessive pressure on low-income workers.
The proposed changes will now depend on the outcome of public consultations and approval by Parliament before they can take effect.