National Treasury Cabinet Secretary John Mbadi has given a fresh update on proposed changes to Pay As You Earn (PAYE), saying the government expects to complete the process by the end of September 2026.
Speaking during a media briefing on Tuesday, August 11, Mbadi said he will spend the coming month collecting views from Kenyans and other stakeholders before drafting the legislation.
The CS said the Treasury had received alternative recommendations to its earlier proposals, including suggestions from the banking sector.
Mbadi noted that the government had initially proposed exempting workers earning between Ksh30,000 and Ksh50,000 from some PAYE obligations, but other stakeholders had presented different ideas that would also be considered.
He said all the proposals would be assessed alongside views gathered during the public participation process before the government settles on a final position.
Once the consultations are completed, the recommendations will be consolidated into a Tax Laws Amendment Bill, which Mbadi said he intends to table before Parliament.
The proposed changes would then require consideration and approval by Parliament before they can become law and take effect.
Mbadi’s latest update comes amid growing concern among workers over when the promised PAYE relief will be implemented, with millions of Kenyans facing declining take-home pay as the cost of living continues to rise.
President William Ruto had previously directed the Treasury to develop measures aimed at reducing deductions from workers’ payslips, with the reforms initially expected to form part of the 2026 tax legislation.
The Treasury had proposed exempting employees earning up to Ksh30,000 from PAYE while reducing the tax rate to 25 per cent for those earning between Ksh30,000 and Ksh50,000.
However, the proposed relief was not included in the Finance Bill 2026, prompting renewed questions over when the government would act on the earlier commitment.
The push for PAYE reforms has also received backing from employers, with the Federation of Kenya Employers (FKE) calling for wider tax bands and lower rates.
FKE Executive Director Jacqueline Mugo said the high tax burden was reducing workers’ net pay while contributing to growing dissatisfaction among employees.
With public participation expected to take place over the coming month, Mbadi has now set the end of September as the deadline for completing the proposals before taking them to Parliament.