Kenya to Eliminate PAYE for Workers Earning Below KSh 30,000 in 2026 Finance Bill

The government has announced major tax relief for low- and middle-income workers. Cabinet Secretary Njuguna Ndung’u said the reforms will be included in the Finance Bill 2026.

“We have agreed with the President that low-income earners in this country should be given a reprieve. He has directed me to take it to Parliament. I don’t think any MP will oppose that,” CS Ndung’u said.

Under the new plan, Kenyans earning KSh 30,000 or less will pay zero PAYE. Currently, the tax applies to employees earning as low as KSh 24,000. The change will benefit about 1.5 million people.

The Finance Bill will also reduce PAYE by 5% for workers earning between KSh 30,001 and KSh 50,000. “We are reducing the tax rate by 5% to 25%. We are trying to put some money in your pockets,” CS Ndung’u added.

The reforms aim to ease the cost-of-living pressures facing low- and middle-income households. Many Kenyans struggle with rising prices and weak household incomes. Officials say leaving more money with workers will help them meet daily needs.

Economists argue the move could boost consumption and stabilize the economy. More disposable income means more spending in markets and shops. It could also encourage savings and increase overall economic activity.

CS Ndung’u emphasized that the government wants the reforms to be fair. “We have said the government should come for me and leave that person. Anybody earning KSh 30,000 and below should pay zero,” he said.

The Finance Bill 2026 is expected to be tabled in Parliament soon. Lawmakers are likely to support the move, given its benefits for ordinary Kenyans.

The government hopes the changes will make the tax system more progressive. Officials say it will ensure low-income earners are not overburdened. At the same time, it aims to strengthen economic growth by putting more money in people’s pockets.