Over 1.5 Million Low-Income Kenyans Set for PAYE Relief Under New Tax Proposal
Treasury Cabinet Secretary John Mbadi has announced a major tax relief plan that could see over 1.5 million employed Kenyans earning below Ksh.30,000 per month exempted from Pay As You Earn (PAYE) tax.
Speaking in Meru on Monday, CS Mbadi revealed that the government is moving to cushion low-income earners from the rising cost of living by reducing their tax burden. The proposal is expected to be formalized through the Tax Laws (Amendment) Bill, which will be tabled in Parliament ahead of the Finance Bill 2026.
“We have agreed with the President that low-income earners in this country should be given a reprieve. He has directed me to take it to Parliament. I don’t think there is any MP who will oppose that,” Mbadi said.
Relief for Low-Income Earners
If approved, the reforms would mark a significant shift in Kenya’s tax policy by easing pressure on workers who earn at the lower end of the wage scale. PAYE has long been a contentious issue, especially for employees whose salaries barely meet basic needs amid rising prices of food, fuel, rent, and utilities.
According to the Treasury, exempting workers earning below Ksh.30,000 is expected to increase disposable income, improve household welfare, and stimulate local economic activity as more money circulates within communities.
Political and Public Support Expected
CS Mbadi expressed confidence that the proposal would receive bipartisan support in Parliament, noting that the move directly addresses public concerns over taxation and affordability. The announcement has already sparked positive reactions from labor groups and members of the public, many of whom have repeatedly called for tax relief for low-income workers.
The government has framed the measure as part of broader fiscal reforms aimed at making Kenya’s tax system more equitable and people-centered, without overburdening those who earn the least.
What Happens Next?
The Tax Laws (Amendment) Bill will first be debated in Parliament. If passed, the PAYE exemption will be incorporated into the Finance Bill 2026, setting the stage for implementation in the next financial year.
Kenyans will be watching closely to see whether the proposal survives parliamentary scrutiny and how the Treasury plans to balance the relief with revenue collection needs.
