Ruto's PAYE Exemption Plan: Who Qualifies, What You Pay Now
President William Ruto proposed on October 20, 2026 that Kenyans earning Ksh32,333 a month or less be exempt from PAYE income tax. It is only a proposal: it needs Parliament to change the law, and no start date has been given.
On our calculation from KRA's current bands and relief, a worker on a Ksh30,000 salary pays about Ksh731 a month in PAYE after the usual payslip deductions, and one on Ksh32,333 about Ksh1,255. With those deductions, PAYE is already nil below a salary of about Ksh26,800 a month. The PAYE plan was the first of four proposals in Ruto's Mashujaa Day speech; the others are on our page on the speech.
The PAYE proposal at a glance
| Question | Answer | Source |
|---|---|---|
| Who would qualify | Kenyans “earning Ksh32,333 per month or less”, in Ruto's words. The reports do not say whether that is gross salary or taxable pay. | People Daily, Nairobi Leo |
| What would be exempt | PAYE, the income tax that employers deduct from employees' pay and pass to KRA. | People Daily, KRA |
| Status | A proposal. It needs legal changes. Ruto said he had directed the Treasury to “place all these proposals before Parliament next week”. | Kenyans.co.ke, The Kenya Times |
| A different figure | Treasury Cabinet Secretary John Mbadi said on October 16 that the limit would rise from Ksh30,000 to Ksh32,800, with an amendment to Parliament in November. | The Star, The Kenya Times |
| Until it is law | The existing tax rules stay in force. | The Kenya Times |
| The earlier plan | No PAYE for earnings below Ksh30,000 and a 25% rate for those below Ksh50,000. Reports of Ruto's speech do not mention the 25% rate. | Kenyans.co.ke |
What a worker pays in PAYE now (our calculation)
These figures are our calculation, not KRA's or the Treasury's. They use the monthly bands and the Ksh2,400 personal relief on KRA's PAYE page, in two versions. In the first, the whole salary is taxable pay. In the second, which looks more like a payslip, the employee's NSSF contribution (6%), SHIF contribution (2.75%, minimum Ksh300) and housing levy (1.5%) are taken off before tax. KRA lists the housing levy, SHIF and contributions to a registered pension fund as allowable deductions. If the exemption passes as announced, a worker's monthly saving would be the amount in the PAYE columns.
| Monthly salary | PAYE now: all of it taxable | PAYE now: after NSSF, SHIF, housing levy | Covered by the Ksh32,333 limit? |
|---|---|---|---|
| Ksh20,000 | Ksh0 | Ksh0 | Yes |
| Ksh25,000 | Ksh250 | Ksh0 | Yes |
| Ksh30,000 | Ksh1,500 | Ksh731 | Yes |
| Ksh32,333 | Ksh2,083 | Ksh1,255 | Yes |
| Ksh32,800 | Ksh2,223 | Ksh1,360 | No at Ksh32,333; yes at Ksh32,800 |
| Ksh35,000 | Ksh2,883 | Ksh1,853 | No |
| Ksh40,000 | Ksh4,383 | Ksh3,153 | No |
Rounded to the nearest shilling. Insurance relief (15% of premiums, up to Ksh60,000 a year, from KRA) and other deductions are not included.
The bands we used
| Monthly taxable pay (Ksh) | Rate |
|---|---|
| The first 24,000 | 10% |
| The next 8,333 (24,001 to 32,333) | 25% |
| The next 467,667 (32,334 to 500,000) | 30% |
| The next 300,000 (500,001 to 800,000) | 32.5% |
| Above 800,000 | 35% |
Personal relief is Ksh2,400 a month. Because the first Ksh24,000 is taxed at 10%, which is Ksh2,400, a worker whose taxable pay is Ksh24,000 or less already pays no PAYE (KRA, The Kenya Times).
How the sum works, step by step
| Salary | NSSF 6% | SHIF 2.75% | Housing levy 1.5% | Taxable pay | Tax on the bands | Personal relief | PAYE |
|---|---|---|---|---|---|---|---|
| Ksh20,000 | Ksh1,200 | Ksh550 | Ksh300 | Ksh17,950 | Ksh1,795 | Ksh2,400 | Ksh0 |
| Ksh25,000 | Ksh1,500 | Ksh688 | Ksh375 | Ksh22,438 | Ksh2,244 | Ksh2,400 | Ksh0 |
| Ksh30,000 | Ksh1,800 | Ksh825 | Ksh450 | Ksh26,925 | Ksh3,131 | Ksh2,400 | Ksh731 |
| Ksh32,333 | Ksh1,940 | Ksh889 | Ksh485 | Ksh29,019 | Ksh3,655 | Ksh2,400 | Ksh1,255 |
- Take off NSSF (6% of pay, in the Ksh9,000 and Ksh108,000 tiers: Kenyans.co.ke), SHIF (2.75% of pay, minimum Ksh300: Kenyans.co.ke) and the housing levy (1.5% of gross pay: KRA).
- Tax what is left on the bands: for Ksh32,333 that is Ksh29,019 of taxable pay, so 10% of the first Ksh24,000 (Ksh2,400) plus 25% of the remaining Ksh5,019 (Ksh1,255), which is Ksh3,655.
- Subtract the Ksh2,400 personal relief. PAYE is Ksh1,255, or nil if the relief is larger than the tax.
NSSF is in dispute. Employers are still deducting at the Act's rates, but the Employment and Labour Relations Court ruled the increases unlawful and the Court of Appeal declined to suspend that ruling (Kenyans.co.ke, July 5). If an employer deducted only Ksh200 a month instead, PAYE on a Ksh30,000 salary would be about Ksh1,131 rather than Ksh731 (our calculation).
Who would gain, and who would not
- Below about Ksh26,800 a month, with the usual payslip deductions, PAYE is already nil, so the proposal would change nothing on our calculation.
- From about Ksh26,800 up to the limit, the saving would be what the worker pays now: up to Ksh1,255 a month at Ksh32,333 on a payslip, or Ksh2,083 if all of the pay were taxable.
- Just above the limit, the design matters. If the exemption is a hard cut-off, a worker at Ksh32,333 would pay nothing while one at Ksh32,334 would still pay about Ksh2,084 on our “all taxable” basis, a jump of that size for one shilling; if the first bands are simply widened, tax would fall only on the excess. The proposal has not been published, so we do not know which.
- Employees only. PAYE is deducted by employers from employment income (KRA). The reports speak of “Kenyans earning” and “workers” and do not say how self-employed people would be treated.
- The numbers match the bands. 24,000 plus 8,333 is 32,333, the top of today's 25% band. The reports do not say whether the proposal was built on that.
What happens next
A tax change takes effect only when Parliament passes it. The sequence so far:
| Date | What happened | Source |
|---|---|---|
| Finance Bill 2026 | The Bill was enacted without the PAYE relief the Treasury had promised to include. | Kenyans.co.ke |
| Sept 15 | Mbadi said the Treasury would hold public participation in the first week of October, then send the changes to Parliament. Under the earlier plan more than 3.4 million salaried workers could pay less PAYE. | Kenyans.co.ke |
| Oct 16 | Mbadi, speaking in Eldoret, said the limit would rise from Ksh30,000 to Ksh32,800 and that the amendment would come to Parliament in November. | The Star, The Kenya Times |
| Oct 20 | Ruto proposed exempting those earning Ksh32,333 or less and said he had directed the Treasury to place the proposals before Parliament “next week”. | People Daily, Kenyans.co.ke |
| Next | Parliament. In May the National Assembly's finance committee heard calls to cut PAYE. Its chairman, Kuria Kimani, cautioned that the changes would cut revenue and asked for computations of the net effect. | Kenyans.co.ke |
What is not clear yet
- Which number: Ruto's Ksh32,333 or Mbadi's Ksh32,800.
- Which date: Ruto said the proposals go to Parliament “next week”; Mbadi said November.
- Gross or taxable pay: if the limit applies to taxable pay, a salary of about Ksh36,000 would qualify with the usual deductions (our calculation).
- The 25% rate for those earning up to Ksh50,000, part of the earlier plan, is not mentioned in the reports of Ruto's speech.
- The cost to revenue, and whether NSSF, SHIF or the housing levy change: the reports we read do not say.
This page is not tax advice. Your payslip and KRA's PAYE calculator show what applies to you today.
Sources
- KRA: Pay As You Earn (PAYE), bands, personal relief, allowable deductions
- KRA: contact us (Times Tower Building, Haile Selassie Avenue)
- People Daily: Ruto announces tax exemption plan for Kenyans earning Ksh32,333 or less (October 20)
- Nairobi Leo: Ruto announces proposal to exempt Kenyans earning Ksh32,333 or less from PAYE tax (October 20)
- The Kenya Times: Ruto announces new PAYE tax exemption (October 20)
- Kenyans.co.ke: Land worth Ksh1 million or less to be exempt from stamp duty, Ruto announces (October 20)
- The Star: Mbadi proposes PAYE exemption for workers earning below Sh32,800 (October 18)
- The Kenya Times: CS Mbadi raises proposed PAYE tax exemption limit from KSh30,000 (October 17)
- Kenyans.co.ke: Treasury delays PAYE relief bill again, sets October timeline (September 16)
- Kenyans.co.ke: LSK pushes for PAYE cuts and Ksh30,000 tax-free salary in Finance Bill 2026 (May 23)
- Kenyans.co.ke: How new NSSF deductions will change employee payslips (February 3)
- Kenyans.co.ke: Ruto defends NSSF growth amid court battle over higher deductions (July 5)
- Kenyans.co.ke: SHA explains varying charges, deductions (May 6)
