Kenya plans to exempt earners of KSh 32,800 or less from PAYE; Bill due in Parliament in November

Treasury Cabinet Secretary John Mbadi said on 16 October that the government will take a Bill to Parliament in November to exempt employees earning KSh 32,800 and below from Pay As You Earn (PAYE) tax, according to a Kenya News Agency (KNA) report published by The Star on 18 October 2026.

At the Central Bank of Kenya's rate of KSh 129.81 to the US dollar, posted on 15 October, KSh 32,800 is about US$253.

Mbadi spoke at The Eldoret National Polytechnic in Eldoret, where he presided over the opening of the Mashujaa Day 2026 Economy (Finance) Thematic Week, held under the theme "An Economy for the People".

"In the month of November, we are bringing that amendment to Parliament," he said, as quoted by KNA.

The exemption is meant to ease the financial burden on low-income households.

The national Mashujaa Day celebration is on 20 October in Eldoret.

In February, Mbadi proposed a lower line. Citizen Digital reported on 2 February that he said in Meru that anyone earning KSh 30,000 and below should not pay PAYE. "You pay zero," he said.

The plan also proposed cutting the rate to 25 per cent for people earning between KSh 30,000 and KSh 50,000.

Business Daily reported on 3 February that the Treasury planned to raise the untaxed threshold from KSh 24,000 to KSh 30,000. Under the rates then in force, monthly income up to KSh 24,000 was taxed at 10 per cent, and the charge was returned to workers as KSh 2,400 in relief.

The relief was missing from the 2026/27 budget, Citizen Digital reported on 11 June.

On 17 September, Capital FM quoted Mbadi saying the review of PAYE bands for low earners would start in the first week of October, later than the September start first expected.

He said that after the review the Bill would go to the National Assembly, which would hold its own public participation.

In Eldoret, Mbadi also said the government had kept VAT on fuel at 8 per cent, half the standard rate of 16 per cent, for a further 90 days.

He said the fuel VAT relief had cost about KSh 54 billion in foregone revenue over six months and was expected to exceed KSh 100 billion over a full year if it continued.

President William Ruto signed the Tax Laws (Amendment) Bill, 2026 into law at Eldoret State Lodge on 16 October. The law keeps the 8 per cent rate on petrol, diesel and paraffin for an initial 90 days, which the Treasury Cabinet Secretary can extend by a further 90 days through a Gazette notice.