Treasury Cabinet Secretary John Mbadi has announced plans to scrap the Ksh28,800 annual personal tax relief as the government prepares to exempt employees earning Ksh32,333 per month or less from Pay As You Earn (PAYE).
Speaking on Thursday, October 22, Mbadi said the Treasury was preparing legislative proposals that would be submitted to Parliament the following week.
“These changes are going to alleviate the pressures households are facing at the moment. These are legislative proposals we are working on. Chances are we should be ready by next week,” Mbadi said.
Currently, eligible employees receive personal relief of Ksh2,400 per month, equivalent to Ksh28,800 annually. The relief is deducted from the income tax calculated on their salaries, reducing the amount payable to the government.
For example, if an employee’s calculated monthly income tax is Ksh7,000, the employer deducts the Ksh2,400 personal relief, leaving Ksh4,600 in PAYE payable to the government.
Workers earning above the proposed exemption threshold could face higher tax deductions if personal relief is abolished without sufficient adjustments to the tax bands.
The proposals also include scrapping stamp duty on land transactions valued at Ksh1 million or less and introducing progressive rates for higher-value transactions.
The proposed stamp duty exemption is intended to make property acquisition more affordable, particularly for lower-income earners.
The planned reforms follow President William Ruto’s announcement during the Mashujaa Day celebrations that the government intends to raise the monthly PAYE exemption threshold from Ksh30,000 to Ksh32,333.
Ruto said the proposed tax exemption would leave workers with more money to meet their daily needs.
“Every shilling saved means more money for food, transport, school expenses and the needs of families,” the President said.
According to the Financial Year 2025/2026 Revenue Performance Report, PAYE collections amounted to Ksh598.807 billion, making it the leading contributor among Kenya’s revenue streams.
