What is PAYE and How is it Calculated in Kenya Today?
Bugigi
January 08, 2026 • 7 min read
If you are employed in Kenya, the most significant deduction on your payslip is likely PAYE (Pay As You Earn). But do you actually know how that number is reached?
What is PAYE?
PAYE is a statutory deduction for income tax that employers are required by law to withhold from their employees' salaries and remit to the Kenya Revenue Authority (KRA) by the 9th of every month.
Current 2026 PAYE Tax Bands
| Monthly Income Bracket (KSh) | Tax Rate |
|---|---|
| On the First 24,000 | 10% |
| On the Next 8,333 | 25% |
| On the Next 467,667 | 30% |
| On the Next 300,000 | 32.5% |
| Amounts Above 800,000 | 35% |
The Calculation Process
Calculating PAYE isn't as simple as multiplying your salary by a percentage. It involves "Taxable Pay" and "Tax Relief." Here is the 4-step breakdown:
Calculate Gross Taxable Pay
Start with your Gross Salary (Basic + Allowances). Subtract allowable deductions like NSSF and SHIF to get your Taxable Pay.
Apply Tax Bands
Distribute your taxable pay through the tiered bands shown in the table above.
Subtract Personal Relief
Every resident individual is entitled to a Monthly Personal Relief of KSh 2,400. This reduces your tax burden directly.
Pro Tip: Don't forget Insurance Relief! If you have a Life or Education insurance policy, you are entitled to a relief of 15% of the premiums paid (capped at KSh 5,000 per month).
Make Payroll Simple
Are you tired of manual spreadsheets and tax errors? Bugigi Solutions offers an automated payroll system that handles KRA, NSSF, and SHIF calculations in seconds.
Trusted by SMEs across Kenya