[Kenya] 2026 Finance Bill aims to raise tax-free income threshold

In Kenya, the government is seeking to raise the threshold of tax-free income from the current KSh 24,000, MSN reports.

The National Assembly's Finance and National Planning Committee has stated that it will evaluate the current five tax bands in the 2026 Finance Bill.

Lawmakers reportedly intend to reduce the burden on high and low-income workers to support the formal sector.

According to reporting from Business Daily, the committee is seeking to lower the top income tax rate from the current 35 per cent and raise the level of monthly pay that is subject to taxes.

Kenyan income taxes are currently paid at a rate of 32.5 per cent for individuals earning above KSh 500,000 per month and at a high rate of 35 per cent for those earning over KSh 800,000.

Kuria Kimani - the committee's chair - said, "The tax-free threshold of KSh 24,000 is low and can be raised to accommodate a wider range of beneficiaries; therefore, I believe the new PAYE (pay as you earn bands) will reflect the new reality. Everyone agrees that reviewing the PAYE bands is crucial."

The Molo MP stated that the top tax rate should be dropped below the 35 per cent threshold to align it with the corporate tax.

"If you lower the corporate tax rate, you also need to lower the upper PAYE band because an individual prefers to be paid as a company rather than an employee," he said.

The drive to cut the top tax rates comes in the wake of the World Bank urging Kenya to raise the highest income tax rate to 38 per cent for individuals making over KSh 800,000.

World Bank reportedly suggested that the tax rate for workers earning between KSh 24,000 and KSh 32,333 should be lowered from the current 25 per cent to 15 per cent.

Source: MSN

(Quotes via original reporting)

In Kenya, the government is seeking to raise the threshold of tax-free income from the current KSh 24,000, MSN reports.

The National Assembly's Finance and National Planning Committee has stated that it will evaluate the current five tax bands in the 2026 Finance Bill.

Lawmakers reportedly intend to reduce the burden on high and low-income workers to support the formal sector.

According to reporting from Business Daily, the committee is seeking to lower the top income tax rate from the current 35 per cent and raise the level of monthly pay that is subject to taxes.

Kenyan income taxes are currently paid at a rate of 32.5 per cent for individuals earning above KSh 500,000 per month and at a high rate of 35 per cent for those earning over KSh 800,000.

Kuria Kimani - the committee's chair - said, "The tax-free threshold of KSh 24,000 is low and can be raised to accommodate a wider range of beneficiaries; therefore, I believe the new PAYE (pay as you earn bands) will reflect the new reality. Everyone agrees that reviewing the PAYE bands is crucial."

The Molo MP stated that the top tax rate should be dropped below the 35 per cent threshold to align it with the corporate tax.

"If you lower the corporate tax rate, you also need to lower the upper PAYE band because an individual prefers to be paid as a company rather than an employee," he said.

The drive to cut the top tax rates comes in the wake of the World Bank urging Kenya to raise the highest income tax rate to 38 per cent for individuals making over KSh 800,000.

World Bank reportedly suggested that the tax rate for workers earning between KSh 24,000 and KSh 32,333 should be lowered from the current 25 per cent to 15 per cent.

Source: MSN

(Quotes via original reporting)