Kenyans earning Ksh30,000 or less could soon take home more money every month if a new tax proposal by the Treasury is approved by Parliament.

Treasury Cabinet Secretary John Mbadi has proposed exempting all employed Kenyans earning up to Ksh30,000 from paying Pay As You Earn (PAYE) tax, even as President William Ruto proposes tax relief for Kenyans earning up to Ksh50,000.

The proposal will be included in the Tax Laws Amendment Bill ahead of the Finance Bill 2026 and is aimed at easing pressure on low- and lower middle-income earners facing a high cost of living.

Under the current system, workers earning between Ksh24,000 and Ksh30,000 pay modest PAYE amounts.

For example, a worker earning about Ksh30,000 currently pays roughly Ksh731 in PAYE every month. If the proposal is approved, this tax would be removed entirely, translating to savings of about Ksh8,700 a year.

For many households, the extra money could help cover basic needs such as rent, transport, or food.

Workers earning above Ksh30,000 but below Ksh50,000 would not be fully exempt from PAYE, but they would still benefit from tax relief. The Treasury has proposed reducing the PAYE rate for this bracket from 30 per cent to 25 per cent.

A worker earning Ksh35,000 currently pays about Ksh1,800 in PAYE each month. Under the new proposal, this would drop to around Ksh1,700, saving about Ksh100 monthly or roughly Ksh1,200 a year.

Those earning Ksh50,000 would also see an increase in take-home pay, although the gain would be smaller relative to their total income. Currently, a Ksh50,000 earner pays approximately Ksh5,845 in PAYE.

Tax relief?

If the proposal is implemented, the first Ksh30,000 would be tax-free, while the remaining Ksh20,000 would be taxed at 25 per cent. After applying personal relief, PAYE payable would fall to about Ksh2,600.

This would raise net pay from around Ksh39,029 to approximately Ksh42,275 per month, giving the worker an extra Ksh3,200 in disposable income.

The figures are estimates and focus only on PAYE. Other statutory deductions, such as the National Social Security Fund (NSSF), the Social Health Insurance Fund (SHIF) and the housing levy, have not been included, meaning actual take-home pay will vary.

While the proposal has been welcomed by many workers, it is not yet law. The tax changes must be tabled in Parliament and approved before they can take effect.

The government says the reforms are intended to put more money in the pockets of low- and middle-income earners and boost household spending at a time of rising prices.

Whether the relief will be enough to ease the broader cost-of-living pressures remains to be seen, but for millions of salaried Kenyans, even a few extra thousand shillings each month could make a noticeable difference.