How PAYE is calculated in Kenya: 2026 tax bands + worked example
Pay As You Earn, explained step by step. The current 2026 bands, what counts as taxable pay, and a full worked calculation for a Ksh 150,000 salary — from gross all the way to net.
Pay As You Earn (PAYE) is the income tax that Kenyan employers deduct from employee salaries every month and remit to the Kenya Revenue Authority (KRA) by the 9th of the following month. If you run payroll in Kenya, understanding how PAYE works is non-negotiable. This guide walks through the calculation step by step, using the current 2026 tax bands.
The 2026 PAYE tax bands
Kenya uses a progressive tax system, meaning the rate increases as income rises. PAYE is applied to monthly taxable income across five bands:
| Monthly taxable income | Rate |
|---|---|
| Up to Ksh 24,000 | 10% |
| Ksh 24,001 – 32,333 | 25% |
| Ksh 32,334 – 500,000 | 30% |
| Ksh 500,001 – 800,000 | 32.5% |
| Above Ksh 800,000 | 35% |
What is taxable pay?
Before applying the bands, you need to arrive at taxable pay — and this is not simply the gross salary. The following statutory deductions reduce taxable income before PAYE is applied:
- NSSF contribution (employee portion, Tier I and II)
- SHIF contribution (2.75% of gross)
- Affordable Housing Levy (1.5% of gross)
- Approved pension contributions (up to Ksh 30,000/month)
- Owner-occupier mortgage interest (up to Ksh 25,000/month)
Worked example: gross salary of Ksh 150,000
Let’s walk through a full calculation for an employee earning Ksh 150,000 gross per month with no pension contributions.
Step 1 · Calculate statutory deductions
| NSSF (Tier I + II) | Ksh 6,480.00 |
| SHIF (2.75% of gross) | Ksh 4,125.00 |
| Affordable Housing Levy (1.5%) | Ksh 2,250.00 |
| Total pre-tax deductions | Ksh 12,855.00 |
Step 2 · Calculate taxable pay
| Gross monthly pay | Ksh 150,000.00 |
| Less pre-tax deductions | Ksh 12,855.00 |
| Taxable pay | Ksh 137,145.00 |
Step 3 · Apply the PAYE bands
| First 24,000 @ 10% | Ksh 2,400.00 |
| Next 8,333 @ 25% | Ksh 2,083.25 |
| Remaining 104,812 @ 30% | Ksh 31,443.60 |
| Gross PAYE | Ksh 35,926.85 |
Step 4 · Deduct personal relief
| Gross PAYE | Ksh 35,926.85 |
| Less personal relief | Ksh 2,400.00 |
| PAYE payable to KRA | Ksh 33,526.85 |
Step 5 · Arrive at net pay
| Gross pay | Ksh 150,000.00 |
| Less statutory deductions | Ksh 12,855.00 |
| Less PAYE | Ksh 33,526.85 |
| Net pay | Ksh 103,618.15 |
When is PAYE due?
PAYE must be remitted to KRA by the 9th of the month following deduction. Filing is done via KRA iTax.
Common PAYE mistakes
- Applying the tax bands to gross salary instead of taxable pay.
- Forgetting to deduct personal relief before remittance.
- Not updating calculations when KRA revises bands mid-year.
- Missing the 9th-of-month deadline.