Africa-Press – Kenya. President William Ruto has defended the proposal to raise the minimum taxable income from the current Sh24,000 to Sh30,000, describing it as a progressive step that would ease the cost of living for many Kenyans.
On Sunday, Treasury Cabinet Secretary John Mbadi announced that Kenyans earning a monthly income of Sh30,000 and below would be exempt from Pay As You Earn (PAYE), an increase from the current threshold that covers only salaried workers earning Sh24,000 and below.
To further reduce the tax burden on the middle class, Mbadi said those earning between Sh30,001 and Sh50,000 would see their PAYE rate cut to 25 per cent.
The change is expected to benefit 3.5 million salaried Kenyans who carry a significant portion of the country’s tax load.
High-income earners would also see relief, with the top tax rate capped at 30 per cent, down from the current 32.5 to 35 per cent.
More than 1.7 million workers earning below Sh50,000 are projected to benefit from lower tax liabilities once the tax-free threshold is raised from Sh24,000 to Sh30,000.
Mbadi said the reduction for the intermediate income band is aimed at leaving more money in the pockets of middle-income earners.
“Those salaried Kenyans—3.5 million of them—are carrying the burden for almost everybody. It is not fair. We have decided to take this proposal to Bunge. I am not even waiting for the Finance Bill. Anyone earning below Sh30,000 in this country should pay zero tax. Zero,” Mbadi said during a public forum in Kiambu county.
Speaking on Wednesday at the State House while hosting UDA aspirants, Ruto said the measure would help shield households from recurring financial challenges by increasing disposable income.
“We are now saying that any Kenyan who earns less than Sh30,000 will not pay any taxes. Any Kenyan earning up to Sh50,000 will see their taxes reduced from 30 per cent to 25 per cent,” Ruto said.
“One and a half million working Kenyans will not pay any taxes, and another 500,000 will have their taxes reduced to 25 per cent. This is how, progressively, we will manage the cost of living. Bottom Up was not just a slogan.”
In its ten-point submission to the National Treasury to guide the Finance Bill 2026, the Kenya Bankers Association (KBA) recommended exempting income below Sh30,000 from PAYE, taxing income between Sh30,001 and Sh50,000 at 15 per cent, Sh50,001 to Sh100,000 at 20 per cent, Sh100,001 to Sh400,000 at 25 per cent, and any income above Sh400,000 at 30 per cent.
Currently, PAYE is zero for the first Sh24,000, 25 per cent on the next Sh8,333, and 30 per cent on the next Sh467,667.
Individuals earning over Sh500,000 per month pay 32.5 per cent, rising to 35 per cent for those earning above Sh800,000.
KBA argued that adjusting tax bands would broaden the tax base, increase government revenue, and encourage savings and investment.
“The purchasing power of salaried Kenyans has fallen significantly in recent years. Adjusting PAYE bands is a practical step to restore household income, stimulate spending, and support businesses,” KBA CEO Raimond Molenje said.
The association added that when workers take home more pay, they spend, save and invest more, which strengthens the economy, improves loan repayment and ultimately grows government revenue.
The proposed top-rate reductions come even as the World Bank recommends raising Kenya’s highest income tax to 38 per cent for individuals earning over Sh800,000.
The lender also suggested reducing the rate for workers earning between Sh24,001 and Sh32,333 from 25 per cent to 15 per cent—a more aggressive cut than the government’s zero-tax proposal.
Mbadi’s proposals are currently under public consultation and are expected to be debated in Parliament once he tables the Tax Laws (Amendment) Bill.
If implemented, salaried Kenyans earning below Sh50,000 could see income tax reliefs ranging between Sh731 and Sh2,127.
The banking sector believes these changes will boost disposable income, empower workers, support micro, small, and medium enterprises, and increase government revenue through higher consumption and investment.
