Business

How Kenyans Salaries Will Change After Ruto’s PAYE Tax Cut

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4 months ago Scott

President William Ruto has unveiled a new tax proposal that could significantly reduce the burden on Kenyan workers, especially those earning moderate incomes. Under the plan, employees earning up to Ksh50,000 per month will pay less Pay As You Earn (PAYE) tax, with the rate set to drop from 30 per cent to 25 per cent.

The President announced during a meeting with UDA aspirants at the State House in Nairobi. He explained that the proposed tax changes will be forwarded to Parliament for debate and approval before they can be implemented.

In addition to the PAYE reduction, the government is considering exempting Kenyans earning below Ksh30,000 from income tax altogether. If approved, this move would offer major relief to millions of low-income earners across the country.

According to President Ruto, the tax reforms are part of broader economic measures introduced since his administration took office in 2022. He noted that improved fiscal management has created room for tax adjustments aimed at supporting ordinary Kenyans.

The President stated that lowering taxes for workers earning up to Ksh50,000 will help reduce financial pressure and make the tax system fairer. He also revealed that more proposals to cut taxes are being prepared and will soon be presented to Parliament.

Currently, a worker earning Ksh50,000 is subject to several statutory deductions before PAYE is applied. These include contributions to the National Social Security Fund (NSSF), the Social Health Authority (SHA) levy, and the Housing Levy. After these deductions, the taxable income is reduced, but PAYE still takes a significant portion of the salary.

If Parliament approves the proposed PAYE reduction, the actual increase in take-home pay will depend on how the tax bands and reliefs are adjusted. However, many civil servants and private sector employees are expected to benefit from slightly higher net salaries.

The government argues that the reforms will make taxation more balanced and protect low-income earners from excessive financial strain. Despite this, Kenyans continue to push for further reductions in statutory deductions such as the Housing Levy, which many believe remains a heavy burden on workers.