Eyeing trillions: Inside govt’s revenue target for 2026
By Aloys Michael, January 4, 2026The Kenya Revenue Authority plans Ksh2.9 trillion tax haul for 2026/27 amid sluggish early-year collections.
According to the National Treasury’s draft Budget Policy Statement (BPS), total revenue for the 2026/27 financial year is projected at Ksh3.487 trillion.
This includes ordinary revenue collected by KRA through taxes and levies imposed by ministries, departments, and agencies under Ministerial Appropriations in Aid (AIA).
The Treasury says the ambitious target is part of plans to fund a Ksh4.64 trillion budget, with new tax policy and administrative measures expected to support revenue mobilisation.
“Total revenues, inclusive of Appropriation-in-Aid, are forecast at Ksh3.487 trillion (16.7 per cent of GDP) in FY 2026-27, up from the projected Ksh3.321 trillion (17.5 per cent of GDP) in FY 2025-26. Within this, ordinary revenue is expected to reach Kshh2.901 trillion (13.9 per cent of GDP), compared to the projected Ksh2.754 trillion (14.5 per cent of GDP) in FY 2025-26,” Treasury said in the BPS.
The Treasury has set a Ksh2.9 trillion revenue target for 2026/27, with Ministerial AIA expected to contribute Ksh585.1 billion. The budget’s KSh4.64 trillion plan leaves a Ksh1.1 trillion financing gap, largely to be covered through domestic borrowing as outlined in the medium term debt management strategy.
Despite a record Ksh2.57 trillion collection in 2024/25, KRA started 2025/26 with a Ksh107 billion shortfall, highlighting the gap between fiscal targets and taxpayers’ capacity.
Meeting the 2026/27 target of Ksh2.9 trillion will require new tax measures and daily collections of Ksh7.95 billion, including holidays.
“Revenue performance will be supported by ongoing reforms in tax policy and revenue administration aimed at broadening the tax base and enhancing compliance,” the draft reads.
The draft noted that KRA’s performance in the current fiscal year has been slow.
“By the end of October 2025, total revenue collected, including A-I-A, amounted to Ksh942.0 billion against a target of Ksh1.049 trillion,” it said, adding that lower ordinary revenue as the main reason for the shortfall.
Ministerial AIA, however, exceeded expectations by Ksh169.2 million.
“The ordinary revenue collection was Ksh766.8 billion against a target of Ksh874.5 billion. All ordinary revenue categories recorded below-target performance during the period under review. The ministerial A-I-A collected amounted to Ksh175.2 billion against a target of Ksh175.0 billion, Ksh169.2 million above the target,” the Treasury said.
While KRA met its overall target last financial year, it has historically struggled to consistently hit revenue goals.
Treasury attributes this to factors such as shrinking real wages, which have slowed income tax growth and eroded purchasing power, affecting consumption taxes like value-added tax.