Millions of Kenyan workers could get bigger paychecks as Treasury revives PAYE tax cut plan
By Aloys Michael, July 22, 2026Millions of Kenyan workers could soon take home more money every month after the National Treasury revived plans to reduce Pay As You Earn (PAYE) deductions on salaries.
The proposed tax relief could benefit more than 3.4 million salaried employees if approved, with low- and middle-income workers expected to receive the biggest relief.
Treasury Cabinet Secretary John Mbadi announced on Wednesday, July 22, 2026, that the government will begin public participation next month on proposals aimed at reducing the tax burden reflected on workers’ payslips.
Speaking during the launch of the 2027/28 Medium-Term Budget Preparation Process in Nairobi, Mbadi said the Treasury will complete consultations before submitting a final report to President William Ruto by the end of August. The proposals will then be presented to Parliament in September 2026 for consideration and possible enactment.
“I know the concern has been on the payslip. Next month I am embarking on public engagement to reduce the tax burden on payslips. Some of you thought we had shelved that idea, but we have not,” Mbadi said.
“We have agreed with the President that I will bring back the report by the end of August, then legislation in September so that Kenyans get relief on their payslips.”
Who could benefit from the PAYE tax cuts?
Under the proposals being considered by the Treasury, employees earning up to Ksh30,000 per month could be exempted from PAYE deductions.
Workers earning between Ksh30,000 and Ksh50,000 per month could also receive relief through a reduced PAYE rate of 25 per cent. The proposed changes are expected to provide relief to millions of salaried Kenyans by increasing the amount of money they retain from their monthly earnings.
However, the measures are not yet law. They will require public participation and parliamentary approval before they can be implemented.Mbadi said the government has received several proposals on how best to reduce the tax burden on employees.
One alternative proposal recommends a 5 per cent reduction in PAYE across all income brackets, instead of targeting only specific salary groups. The CS said all proposals will undergo public participation before the government settles on the final framework.
Finance Bill 2026 PAYE omission relief
The renewed push for PAYE cuts comes after the tax relief measures failed to appear in the Finance Bill 2026 despite earlier commitments from President Ruto and the Treasury.
President William Ruto had earlier announced that the government was working on measures to remove PAYE for workers earning below Ksh30,000 per month and reduce the tax burden for those earning between Ksh30,000 and Ksh50,000.
The President said the move could create a revenue gap of about Ksh40 billion, but argued that the government was exploring alternative ways to grow the economy without placing more pressure on low-income earners.