KRA: PAYE records 6.7% growth amid public outcry over higher tax burden
By Ndiritu Wanjiru, July 11, 2026Pay As You Earn (PAYE) tax collections hit Ksh598.807 billion in 2025/26, a slight increase of 6.7 per cent from the previous year, even as the Kenya Revenue Authority (KRA) reported that the tax head had only collected 91.8 per cent of the target.
KRA’s latest revenue performance report presented on Friday, July 10, 2026, shows that PAYE collections grew by 3.3 per cent in the 2024/25 financial year, pointing to a turnaround in collections.
The rise was still less than the average growth of 8.5 per cent it achieved during the 2022/23 and 2023/24 financial years, however, suggesting that PAYE revenues have not returned to the level of strong growth seen before last year.
The tax authority said it was due to a shrinking percentage of Kenyans in formal employment, restricting the tax base for the PAYE initiative.
The amount of money collected through the PAYE system was Ksh598.807 billion, which increased by 6.7 per cent and achieved a performance rate of 91.8 per cent. The growth was 3.3 per cent in FY 2024/25 even though the tax head continued to be impacted by the effect of the declining proportion of formal employment in total employment, KRA said in the report.
PAYE affected by formal employment
KRA’s report shows that the share of formal sector employment has been on a gradual decline over the past three years. Formal employment, which made up 15.7 per cent of total employment in 2022, dipped to 15.5 per cent of total employment in 2024 and to 15.3 per cent in 2025.
The trend illustrates that the number of people who earn a living in the informal sector, where the proportion of income tax compliance is relatively low, continues to grow, while the number of salaried employees from whom the tax is collected through PAYE is shrinking.
Growing public anxiety about Finance Act amendments
These are the latest statistics a month after an Employment Tax Change raised widespread public concern as part of the Finance Act 2026.
When the Finance Bill 2026 was being debated in the House of the National Assembly, workers, trade unions and professional bodies complained that they were receiving little money in their pockets after taking into account the various taxes and levies being deducted from their pay, such as PAYE, the Social Health Insurance Fund (SHIF), the National Social Security Fund (NSSF) and the Affordable Housing Levy.
Many employees in the country, however, said that the rising deductions were adding to the burden of Kenyans struggling to meet the rising cost of living, which was already a burden on their finances.
Even though the revenue collected from PAYE was below the target, it remained one of the biggest sources of domestic revenue, contributing towards the authority’s record Ksh2.84 trillion revenue collection in the 2025/26 financial year.