Pay As You Earn (PAYE) is a tax system used in Kenya to collect income tax from employees’ salaries and wages. It is administered by the Kenya Revenue Authority (KRA) and applies to all individuals earning a regular income, whether employed in the public or private sector.
The PAYE system ensures that taxes are deducted directly from an employee’s monthly salary by the employer before payment is made, making it easier for individuals to comply with tax obligations.
Under the Kenyan tax laws, employers are required to calculate, deduct, and remit PAYE to KRA on behalf of their employees by the 9th day of the following month. This system provides a convenient way for the government to collect income tax while ensuring employees do not have to make separate tax payments every month.
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PAYE Tax Rates in Kenya
Kenya uses a graduated tax rate system where the percentage of tax increases as income rises. As of 2025, the tax bands are as follows:
- 10% for income up to KSh 24,000
- 25% for income between KSh 24,001 – KSh 32,333
- 30% for income between KSh 32,334 – KSh 500,000
- 32.5% for income between KSh 500,001 – KSh 800,000
- 35% for income above KSh 800,000
Additionally, every taxpayer is entitled to a personal relief of KSh 2,400 per month, which reduces the total tax payable.
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Other Deductions
Apart from PAYE, there are other statutory deductions that may be taken from an employee’s salary, such as:
- National Social Security Fund (NSSF)—retirement savings
- Social Health Insurance Fund (SHIF) – healthcare coverage
- Affordable Housing Levy – housing development contribution
- Pension contributions—where applicable
These deductions are calculated separately and do not form part of PAYE, but they are mandatory for most employees.
Why PAYE Matters
PAYE is crucial because it funds essential public services such as healthcare, infrastructure, education, and national security. It also promotes compliance, as employees automatically meet their tax obligations through employer remittance.
Below is PAYE calculator and deductions.
